Service Charge & Lease FAQ

Square Roots Service Charges & Property Lease Explained

What is a property service charge?

A property service charge is a payment made to the landlord to cover the safety and upkeep of the communal areas of your development. Shared Owners and tenants contribute to this charge, which is collected by Square Roots or the appointed Managing Agent.

What does my property service charge cover?

The cost can vary for each property development depending on size, number of properties in the development and the communal facilities provided. Some of the most common elements are: 

• Landscape maintenance – such as cutting the grass, maintaining communal gardens, and litter picking 
• Utilities – electricity, heating and water
• Cleaning – internal communal areas such as corridors, stairwell and lifts
• Lift maintenance
• Fire equipment maintenance
• General repairs and maintenance
• Buildings insurance
• Other electrical and mechanical equipment maintenance – specific to each development, but this could include items such as water pumps and communal heating boilers.
• Bank charges and audit fees
• Estate management fees

What is a service charge estimate?

Your service charge is based on an annual (April-March) estimate prepared by the appointed managing agent for Square Roots, the estimate is a breakdown of all the anticipated operational expenses associated with the communal areas of your development/estate. 

Estimates are calculated based on costs from previous years, if the property is new it is based on similar sized estates in conjunction with figures obtained from contractors and installers for servicing and maintenance of equipment at the development. As this is an estimate for the year, the balance of your account and the payments collected may need to be adjusted once the service charge account has been reconciled and audited at the end of the financial year. 

What is a “service charge actual”?

For shared ownership customers the audited service charge accounts will be available 6 months after the financial year end.

Unlike the estimates, which are a forecast of charges for the coming accounting period, the actuals are a breakdown of the amounts incurred over the previous accounting period. 

If there is a difference between the estimate and actual cost the shortfall will be collected, or the surplus will be credited or taken off the next payment. We do not make any profit from service charges.

How is my individual service charge contribution calculated?

Your service charge contribution is calculated according to the terms of your lease. Costs are divided (or ‘apportioned’) among properties in a block and/or development. This is done according to the size (or square footage) of your property and what services you have access to. For example, if you live on the ground floor, but have access to a lift you will contribute towards its maintenance, and repair, however, if you do not have access to the lift, even if your block has one, you will not contribute to maintenance or repairs.

What is a property lease agreement?

A lease is a legal, binding contract outlining the terms under which property is purchased. . Purchasing a property, which is leasehold, means you own the property but not the building or land which is retained by the freeholder/Square Roots.

New build leases contain the following main terms:

Parties to the lease
People or companies involved in the contract

The Property
Your lease will usually have a description of the property, which is referred to as the demised premises

Right granted with the property
Your rights relating to access over shared areas i.e. communal areas or other parts of the building. This may also include rights of way, which can be discussed further with your solicitor

Regulations (Covenants)
Contains what a leaseholder can or cannot do when living in the property.

Lessee’s obligations
Explains what the leaseholder is responsible for (Common obligations) which include service charges, estate charges, use of the flat, etc.

Access
Access rights with the landlord/ management company. 

Landlord’s obligation
Obligations of the landlord under the lease i.e. repairs, insurance and management

Length of lease
This can vary, but typically new build leases start from 250 – 999 years and the commencement date will also be shown on the same page.