Service charge accounts: Everything you need to know

A service charge is what a tenant or leaseholder will have to contribute to the costs of services or repairs made to the surrounding areas of the land that the property is situated on.

This could be made up of costs such as general repairs and maintenance to electricity bills for communal areas in the case of units within a block of flats.

Service charge accounts are produced to show the allocation of service charges. They will typically include information such as service charge income and expenditure and are prepared annually.

The service charge is made up of a variety of costs such as the daily expenditure which comes with maintaining the property such as insurance costs, communal area cleaning etc. It will also include those expenses which are incurred less frequently such as renovation & decoration costs. Finally, in respect of potential costly repairs which could arise during the year, a reserve may be held to cover this should it appear.

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Managing renovation costs for properties

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Accounting 101 for Property Managers