Glossary · UK
What is Service Charge?
A recurring payment leaseholders make towards the maintenance and running costs of a building and its shared areas.
Full Definition
A service charge is a payment that leaseholders, and some freeholders on managed estates, make to cover the cost of maintaining and running a building and its shared spaces. Typical costs include cleaning, lighting and repairs to communal areas, lifts, buildings insurance, gardening, management fees and contributions to a reserve or sinking fund for major future works. The charge is set out in the lease, which explains how costs are shared between owners, and the freeholder or managing agent must usually be able to justify the amounts. Service charges can vary significantly from year to year, especially where large one-off works are needed, and leaseholders have legal rights to be consulted on major works above a set threshold through a Section 20 notice. Leaseholders can challenge charges they believe are unreasonable at a tribunal. When buying a leasehold property, it is important to ask for recent service charge accounts and any planned major works, as these can add substantial costs. The amount varies by building, so treat any quoted figure as specific to that property and check the latest statements before committing.