Setting a service charge budget.
In short
A service charge budget is the board's estimate of what the building will cost for the year, heading by heading: insurance, cleaning, communal electricity, safety servicing, repairs, professional fees and any reserve fund contribution the lease allows. Each flat pays the share its lease sets, worked out to the penny, usually in instalments on account. The board should adopt it formally and keep the papers that support each figure.
What headings does a block's budget usually have?
Buildings insurance; cleaning; communal electricity and water; fire alarm, emergency lighting and other safety servicing; the fire risk assessment and other periodic surveys; gardening; lift costs if there is a lift; general repairs and maintenance; the accountant and company filings; bank charges; and, where the lease allows it, a contribution to a reserve fund for major works.
How is the budget split between flats?
By the shares the leases set, usually a percentage or a fraction for each flat. The shares should add up to the whole: if they come to 98% the block under-recovers every year. Work each flat's share to the penny and check the parts add back to the total.
Can we collect money in advance?
Only if the lease allows on account payments, which most modern leases do, usually half-yearly or quarterly. Any reserve fund also needs the lease to allow it. Money collected is held on trust for the leaseholders, and at year end the actual costs are compared with what was collected.
What about major works in the budget?
Planned works that would cost any one flat more than £250 need a Section 20 consultation before they are contracted. Putting them in the budget is not consultation. A reserve fund spreads the cost; it does not remove the need to consult.
How should the board adopt the budget?
At a board meeting or by written resolution, minuted, with the supporting quotes and last year's actual costs kept on file. Leaseholders can ask for a summary of the costs behind the service charge, so a budget the board can explain line by line is the one that avoids disputes.
Where Servanda comes in
Servanda takes the headings, works out every flat's share to the penny so the parts always add up, flags works that may need Section 20, records who adopted it, and raises the demands from it.
Everything Servanda doesThe law
The legislation is the authority; this page is a plain summary for England, checked on 2026-10-23. Wales and Scotland have their own rules. Take advice on any particular building.