our services

service charge accounts

Landlords and property management companies who collect service charges require Service Charge Accounts to settle these shared costs. Managing and collecting these charges requires specialist knowledge of accounting in this sector, which is where GBAC can help.

GBAC is a partner of the Association of Residential Managing Agents (ARMA), the leading body for residential management agents in England and Wales. Our service charge team has experience in preparing accounts for residential and commercial developments, both single and multi-schedule, delivering a thorough yet efficient service for managing agents and leaseholders.

Not only do we work with managing agents and companies to produce Service Charge Accounts and statutory accounts, but we can also deal with all Companies House filing obligations to ensure that you fulfil your legal obligations as a business.

What are Service Charge Accounts?

When a building is separated into individually owned/occupied units, whether residential or commercial, Service Charge Accounts are needed to formally manage shared running costs for the building. These can include cleaning and maintenance, lighting and heating for communal areas, waste collection, building insurance, security, and management costs.

Service Charge Accounts provide a formal summary of costs, typically based on estimates from previous years, and collect the charges from the occupiers. This ensures that the funds are available to pay for the required maintenance of the building as and when they’re needed. They’re typically charged annually, though the charges may be collected quarterly or bi-annually.

Property management companies, landlords, and agents use Service Charge Accounts to set out and collect appropriate charges as agreed in the occupiers’ leasehold or tenancy contracts. It is a legal requirement to produce these accounts and file them with Companies House.

These accounts can be complex and may lead to disputes between occupiers and owners if they aren’t managed properly. Having a qualified accountant to prepare and certify Service Charge Accounts reduces the risk of discrepancies, ensuring that your accounts are accurate and up to date.

Contact us for Service Charge Accounting

Accounting for service charges requires an understanding of the property industry and its technical specialisations. It’s possible for landlords and management companies to handle Service Charge Accounts in-house, but there are many things that can go wrong if they’re mismanaged, with potential negative consequences for occupiers and owners.

It’s a better idea to rely on dedicated accountants who can comprehensively manage your Service Charge Accounts for you. At GBAC, our highly experienced team will assist with the preparation of Service Charge Accounts through our seamless and pro-active service, keeping your accounts in order, your properties in their best condition, and the occupiers happy.

We’re strongly committed to delivering client satisfaction through transparency and tailoring our accounting and auditing services to your needs. If you would like more information about how GBAC can help you with your Service Charge Accounts, please get in touch on 01226 298 298 to speak to our team today, or email your enquiry to info@gbac.co.uk.


The details of the service charge period for a property should be set out in its lease, which should specify whether payment is due before or after services are provided, and whether payments should be made in instalments or charged in full after costs are calculated.

While the service charge period typically runs with the financial year, which starts in April, the Service Charge Account cycle may be up to 18 months. Estimated costs for the coming year should be provided in an advance budget statement, with a schedule of payments for the next year.

These estimated-cost service charge payments may be due every three months, every six months, annually, or even monthly on some occasions, as set out in the leaseholder’s contract.

When the fiscal year has ended, it may take up to another six months to provide the actual final bill and an accurate year-end statement. If the known costs are higher than the estimated payments, the leaseholder may be billed again for a year-end charge to make up the shortfall. If the costs are lower, the difference may be reimbursed to the leaseholder or credited for the next year.

It is customary for Service Charge Accounts to collect payments from leaseholders in advance of the annual accounting period based on estimated costs. This is the most straightforward way to avoid a large bill for unforeseen expenses if extensive repair work is needed unexpectedly.

The lease must explain how service charges for the building or block will be calculated and how they will be split between leaseholders. The total estimated costs may be divided equally by the number of flats, or they may be ‘apportioned’ based on more complex calculations. These could be based on factors such as each flat’s square footage, number of bedrooms, or rateable value.

The estimated costs will include day-to-day costs like administration and cleaning, and cyclical costs for less frequent maintenance requirements. Though it’s not possible to guarantee exact costs a year in advance, service charges are typically estimated based on the final bills from previous years.

This may involve working out an average based on receipts from the last three fiscal years, and taking changes in prices and relevant external factors into account. Increasing service charges will reflect inflation rates year on year to ensure the collected payments will cover as much of the anticipated costs for running and maintaining the building as possible, if not all of them.

According to Section 20B(1) of the Landlord and Tenant Act 1985, a landlord must make sure that Service Charge Accounts are paid up within 18 months of the relevant expenses being incurred. This means that if a landlord does not request service charge payments within 18 months of the costs incurring, then they can no longer recover these costs from the leaseholder.

However, under Section 20B(2) of the same legislation, landlords are still able to demand payment for service charges after this period as long as they notified the leaseholder of the costs and payments due within those 18 months. (This doesn’t apply for ground rent arrears, which can be recovered for up to six years).

To avoid the repercussions of the 18 month rule, you must manage your Service Charge Accounts professionally and efficiently, including notifying leaseholders in writing with correctly addressed, certified documents that set out the leaseholder’s obligations and details of requested payments.

Automating your Service Charge Account activities through software managed by trained accountants like GBAC is one of the most convenient ways to ensure that you won’t get caught out by the 18 month rule. Your accounts will be as up to date as possible, allowing you to issue notification documents to leaseholders in good time for costs to still be deemed payable.