Service charge /Community fee
Service charge
- What it is
- A regular payment for the upkeep of the common areas of a complex or building
- What you pay for
- Cleaning, security, lifts, pool, landscaping, insurance, management
- How it is calculated
- Usually in proportion to the area of your property
- What to check
- The current amount, how it has grown and whether there are arrears on the property
- The hidden risk
- Special levies for major repairs on top of the regular payment
In plain words
A service charge (community fee) is a regular payment for the upkeep of a complex’s common areas: cleaning and security of the grounds, maintenance of lifts, the pool and parking, landscaping, building insurance and the work of the management company. The amount is usually calculated in proportion to the area of your property.
It must be paid whether or not you live in the property: it is not a metered utility bill but a share of the common costs. In complexes with extensive facilities — pools, gyms, concierges, security — the charge can be substantial and noticeably affect the final return on the investment.
A separate risk that sellers rarely warn about is special levies. When major repairs to the façade, roof or building services are needed, owners bear the costs on top of the regular payment. That is why, before buying, you look not only at the current charge but at how it has grown, the condition of the building and whether there are arrears on the property.
When it matters
What to check about the charge
- Current rate
- Basis of calculation
- Payment frequency
- List of services
- Level of facilities
- Building insurance
- How it has grown
- Past special levies
- Condition of the building
- Arrears on the property
- Who is liable on transfer
- Certificate of no arrears
How to check before buying
- 01Request the current charge
- 02Look at how it has changed over the years
- 03Check the arrears on the property
- 04Include it in the yield calculation
- 05Decision on the property
What you need to know
- The payment does not depend on whether you live in the property
- The amount is usually proportional to the area
- Extensive facilities mean a high charge
- Special levies for repairs arise in addition
- The previous owner’s arrears may pass with the property
Common mistakes
- Not asking the amount of the charge before the deal
- Not checking the previous owner’s arrears
- Ignoring how the payment has grown
- Not including the charge in the yield calculation
- Not finding out the condition of the building and plans for repairs
What this means for a BRIDGES client
We include the service charge in the yield calculation and check the arrears on the property before the deal. It is one of those items sellers mention last, yet it has to be paid for years.
Frequently asked questions
01 /What is a service charge?
A regular payment for the upkeep of a complex’s common areas: cleaning, security, lifts, facilities, insurance, management.
02 /Do I have to pay if I do not live there?
Yes. It is a share of the complex’s common costs, not payment for metered services consumed.
03 /How is the amount calculated?
Usually in proportion to the area of your property. The exact procedure is set by the complex’s documents.
04 /What is a special levy?
An additional payment for major works — repairs to the façade, roof or building services. It arises on top of the regular charge.
05 /Do the previous owner’s arrears pass to me?
In some countries, yes: the debt is attached to the property. That is why a certificate of no arrears is obtained before the deal.
06 /How does it affect the yield?
Directly: the charge is deducted from rental income. In complexes with extensive facilities it can eat up a noticeable part of the profit.
See also
Read next
This material has undergone editorial review by BRIDGES.
Working out the costs of a property?
We will check the service charges, arrears and plans for repairs — before the contract is signed.