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Why Is My Service Charge Much More Expensive Than My Neighboring Block?

The difficulty with comparing service charge costs between individual blocks of flats can be explained by considering in a number of factors. The method of calculation can differ for each block in line with any variance in leasehold arrangements. The property size, type, height, condition, age, service facilities, plant, lifts, equipment and lease particulars can all have a significant influence on the maintenance and running costs. In addition, the maintenance and repairs history and sinking fund provision may also vary considerably making comparisons of the level of freehold service charges extremely difficult. Not only will the freehold property and its condition be unique, but the property services necessary in managing and maintaining the building can be quite different along with the requirements of the property lease.

In summary you should not compare apples with oranges and in many cases there are probably good reasons for any two landlord service charges being different. Here are some possible explanations which may be applicable in comparing one typical block management scenario with another.

(i) You may have a more comprehensive set of services funded through your service charge (e.g. site manager or porter, all windows cleaned, lifts, car parking, entry systems etc.).

(ii) Does your neighbour’s service charge include sinking funds to allow for future repairs and maintenance? If not, their charge is likely to fluctuate dramatically from year to year as large expenditure falls due. Large items may well be charged for separately as and when they arise being additional to any regular landlord service charge.

(iii) How many individual flats are in the neighbouring building? Smaller blocks of flats with less units tend to have a higher maintenance charge per unit. Overall maintenance costs are often disproportionately more expensive where the cost is shared by fewer lessees. If service charges are spread across a large number of flats it follows that the proportion for each leaseholder will be less. For example, a roof repair provided for only 6 flats is expensive compared to the same facility provided for 32.

(iv) Do you have extensive gardens or is your block an older building? If so, your service charge could be adversely affected. The presence of asbestos for example can have a dramatic effect on the costs of any works being carried out.

 

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