Understanding service charges in new buildings

If you buy an apartment, you’ll almost certainly pay a service charge: your share of the cost of running and maintaining the building’s shared parts. It’s one of the most important numbers in a purchase, and one of the least discussed.

What it covers

Typically: cleaning and lighting the common areas, buildings insurance, lift maintenance, gardening, management fees and a contribution to a reserve fund for long-term repairs. Concierge services and amenities such as gyms add to the cost.

How it’s set

In a new building, the first year’s charge is an estimate prepared by the managing agent. Ask to see the budget behind it, line by line, and how it compares with similar buildings nearby.

Questions worth asking

Is there a reserve fund, and how is it calculated? Who appoints the managing agent? How have charges changed in the developer’s other buildings after handover?

General information only. Always review the lease and budget with your solicitor.