What to review before approving your next service charge budget

Before approving your next service charge budget, it is essential to conduct a thorough review that safeguards the interests of residents, freeholders, and management directors while ensuring compliance with the Building Safety Act. This newsletter outlines the key areas to examine, including reserve fund adequacy, Section 20 consultation requirements, fire risk assessment updates, and contract validations for major works. Drawing on hands-on experience managing mixed use and high rise estates across London, we provide clear guidance to help you confirm transparent accounting and agree a budget that is both fair and compliant.

Key financial checks

Begin with a thorough examination of your financials. Ensure reserve funds are adequate for future needs and verify that all accounts are reconciled. Confirm that expenses align with the current budget to avoid surprises. Clear understanding of finances is crucial for decision-making.

When financials are clear, you can focus on safety and compliance obligations.

Compliance and safety obligations

Compliance involves more than just a checklist. Regular fire risk assessments, lift safety checks, and water hygiene testing are essential. Review your Building Safety Act compliance and ensure all documentation is up-to-date. A proactive compliance strategy builds trust and safety.

With compliance in check, turn your attention to contracts, energy, and inflation adjustments.

Contracts, energy and inflation

Review existing contracts for major works and maintenance. Verify that you receive competitive pricing and that terms reflect current economic conditions, including energy costs and inflation. This ensures your budget accounts for all variables, maintaining financial stability.

Finally, ensure residents are informed and involved in budget approvals.

Resident communication and approval

Effective communication with residents fosters transparency and trust. Share budget outlines, invite feedback, and ensure that everyone understands what their service charge covers. Engaging residents in this process builds community confidence and clarity.

Take proactive steps now to secure a seamless service charge approval process.

P.S. Clear communication and thorough review can prevent costly mistakes.

Contact the Temphis team to explore how we can support your and your needs