Service Charges

Service charges are the running cost most buyers underestimate, and the one that quietly decides whether an investment works.

What they cover

• Maintenance of shared areas, lifts and plant
• Security and cleaning
• Chilled water infrastructure in many towers
• Building insurance
• Reserve fund for major future works

Why they vary so much

Charges are levied per square foot and vary enormously by building. High-amenity towers with pools, gyms, concierge and extensive landscaping cost more to run than simple buildings. Waterfront and reclaimed-land communities carry marine infrastructure that inland ones do not.

The consequence is that two units at the same purchase price can produce materially different net returns purely on running costs.

Questions to ask before buying

1. 1What is the current charge per square foot for this specific building?
2. 2How has it moved over the last three years?
3. 3Is there a reserve fund, and is it adequately funded?
4. 4Are there any special levies planned or under discussion?
5. 5What is the collection rate from other owners? Poor collection shifts cost onto those who pay.