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If you own a leasehold flat you will probably have to pay a service charge to cover the maintenance costs. Service charges are usually paid annually, but can also be monthly, quarterly or half-yearly. Some private tenants may also be expected to pay service charges.
What does a service charge cover?
Service charges usually cover things like:
- repairs,
- cleaning,
- communal gardens.
They sometimes cover buildings insurance as well, but you may pay this separately. You normally have to pay a share of everything even if you don't use some of the services.
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How much do I have to pay?
If you are not sure what your service charges cover, check your lease. It should say clearly:
- what services you have to pay for and when,
- how your freeholder can collect the charges,
- how service charges are calculated,
- how they are divided between you and any other leaseholders,
- whether there is a sinking or reserve fund.
Most leases have a section that covers general services not mentioned in the lease. This is known as a 'sweeping-up clause'. If your lease doesn't have this type of clause, you don't have to pay for anything that isn't specifically mentioned in the lease.
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What is a sinking or reserve fund?
Many leaseholders have to pay towards the costs of major repairs that may be needed in future into a 'sinking fund' or a 'reserve fund' on top of their regular service charges. This is often a precaution to pay for things like replacing a roof or repairing a lift if there is an emergency.
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What happens if I don't pay?
Your freeholder can take you to court if you don't pay the service charge. You could lose your home, but this doesn't happen automatically. The freeholder must follow special procedures and get a court order.
Get advice from Housing Rights Service if you are having problems with your freeholder or are not sure of your rights.
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