What a service charge actually buys

Rent is the number everyone compares. The service charge is the number that decides whether the comparison was worth anything.

What it is meant to cover

A service charge pays for the parts of a building nobody owns alone: security, the lift, the generator and its fuel, water pumps, the compound, the cleaner, the reserve for the roof nobody is thinking about yet.

It is not profit. Where it is being treated as profit, the accounts are the place that shows it.

The two questions

1. What did it actually cost last year? A budget is a forecast. Twelve months of real spend is a fact, and a landlord or management company that cannot produce it is telling you something.
2. What is in the reserve? Buildings do not fail gradually. They fail on the day the lift stops, and the reserve is what decides whether that is an inconvenience or a special levy.

A low service charge on an ageing building is not a saving. It is a bill with a later date on it.

How to compare two places properly

Add the service charge to the rent and compare that. A flat two hundred dollars cheaper with a charge two hundred and fifty higher is the more expensive flat, and it will stay the more expensive flat for as long as you live there.

Where the number should sit

There is no single right figure - a serviced tower with a generator, a pool and round-the-clock security genuinely costs more to run than a four-unit block with a gate. What matters is that the figure is explained line by line, has last year's actuals beside it, and moves for reasons somebody can name.