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  • Writer's picturekarimfakhreldeen

Why are service charges usually payable in advance?

The vast majority of leases will allow the landlord or manager to estimate and demand payment of service charges in advance of the accounting year. This ensures the landlord or manager has the funds available throughout the accounting year to meet the cost of providing the services. The landlord or manager must try to ensure that the amount payable in advance is reasonable but there is no legal requirement for consultation with leaseholders such as a budget meeting to allow debate regarding any prospective charges.

However, the Government approved codes of practice state that the landlord or manager should produce a proposed budget and hold a meeting with the leaseholders to allow consultation. It should be emphasised that the budget produces an estimate of the annual service charge, which will be adjusted when the actual expenditure is known at the end of the accounting year.

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