It has been reported in a survey by Direct Line for Business that the UK’s yearly property service charge (on average) presently sits at a notable £1,863, with this number rising another 96% specifically for new-build properties, totalling in at £2,777 per year. Additionally it has also been revealed that approximately one third of property managers have inflated their service charge rates over the last 48 months, with rates presently varying between £1.55-£7 per sq ft of space.
The most shocking of the results of the survey, however, is the highlighting of the fact that the average service rates which leaseholders need to pay for their share of building maintenance actually sits at a value which is greater than two months of the average landlord’s monthly rents (£906). Further to this, additional charges exist, including tax and mortgage payments, agency and management fees, and ground rent fees (on average between £327 and £371 depending on when the property was built).
Additionally, it isn’t simply a case of the wide charge differentiation between newer and older properties, but even quite vastly between the nature of specific developments. This can see homeowners paying circa £1.55 per sq ft for a new-build in Croydon this year, yet £7 per sq ft for one in Lambeth next year – a shocking increase in charges.
Part of the price differentiation, however, can be attributed to the very nature of what a traditional new-build may incorporate. With new-builds increasingly coming integrated with additional facilities not present in older buildings, there is at least some explanation for the vast property difference. Such additions may include things such as gyms, cinemas, libraries and more which is used to add value to the property for potentially interested investors.
Increasingly, service charges are something which landlords are urged to take note of and factor into the longevity of their investment plans. With differentiation in, firstly the different areas which may be incorporated into the charges (such as shared services) as well as the potential for such charges to change rapidly in given cases, monitoring these costs is becoming increasingly integral.