Understanding a service charge can be difficult because the figure on the demand is only the end result of a much larger financial picture. To understand what you are being charged and why, it may be necessary to look across the lease, annual budgets, year-end accounts, expenditure schedules, invoices, contracts, reserve-fund information and major-works documents.
Our guide for News on the Block sets out a practical, evidence-based approach to reviewing those records.
A useful starting point is the lease. It can help establish what types of expenditure may be recovered through the service charge and how costs are allocated between leaseholders. The next step is often to compare the budget with actual expenditure. Material differences do not automatically mean that something is wrong, but they can identify areas where further explanation or supporting evidence may be useful.
Supporting documents can then provide another layer of information. Invoices, contracts and expenditure schedules may help explain what work was carried out, which supplier was used and how a figure appearing in the accounts was calculated. Where information is incomplete, identifying the missing evidence can itself help turn a broad concern about service charges into a specific question.
The guide also considers apportionment and allocation, reserve or sinking funds, supplier relationships and major works, including the separate consultation requirements that can arise under Section 20.
This is the same document-led principle that underpins VeraHold’s approach to service-charge reviews. Rather than assuming that a high or increasing charge is necessarily incorrect, the objective is to establish what the documents show, whether the figures connect logically across those documents and where further clarification may be justified.
For leaseholders, this can provide a clearer basis for communicating with a landlord or managing agent. For RTM companies, RMC directors and resident groups, the same approach can also be applied at building level to understand expenditure, monitor changes over time and identify areas that warrant closer attention.