What is a Service Charge Budget?

A service charge budget is a financial plan that outlines the anticipated costs associated with the management, maintenance, and upkeep of leasehold properties, particularly those comprising multiple flats or units. This budget is typically prepared annually and serves as a crucial tool for property managers and leaseholders alike. Key components of a service charge budget include:

  • Maintenance and Repairs: Funds allocated for routine maintenance tasks and unforeseen repairs to ensure the property’s upkeep and functionality.
  • Insurance: Costs associated with building insurance to cover potential risks such as fire, flooding, or structural damage.
  • Utilities: Expenses for communal utilities such as electricity, gas, water, and waste disposal.
  • Management Fees: Fees charged by property management companies for their services in overseeing the day-to-day operations of the property.
  • Other Communal Services: Additional services provided to residents, such as cleaning, landscaping, security, or amenities maintenance.

For a property manager understanding the service charge budget for a development under management is incredibly important. Not only will the budget provide you with a a target within which to financially manage the property, but it will list out the services that you need to provide and, importantly, the tenants will be expecting you to provide.