Service Charge Budgets
What it really costs to run a block of flats, based on the live budgets and actual spend of the buildings we manage. Use the estimator to build a budget for your own building in a couple of minutes.
Every year your managing agent sets a service charge budget. It decides what each leaseholder pays on account, how much goes into the reserve fund, and whether there will be a surplus or a balancing charge at year end. A good budget is close to what the building will actually spend. A poor one leaves leaseholders with unexpected bills, or with money held back that was never needed.
Describe the building
Modest is about £150 per flat a year; healthy is about £350.
If you know this year's premium, enter it. Otherwise we estimate it from comparable blocks.
See every heading with a low, typical and high figure, plus notes on what to check. Free, and no obligation.
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Your line-by-line estimate
Figures include VAT where it is normally charged. Headings marked Watch are the hardest to predict, so allow a margin.
| Heading | Low | Typical | High |
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This is an estimate, not a quote or a budget for a specific building. Real costs depend on the lease, the building's condition, contracts in place and insurance claims history. Major works, one-off surveys and legal costs are not included.
The estimator uses the current budgets of the residential blocks we manage, mostly in London, checked against their actual running costs.
Typical costs per flat
These are the figures behind the estimator. The range shows the middle half of buildings that have each cost, so a quarter of buildings spend less and a quarter spend more.
| Budget heading | Typical | Usual range | How it is usually charged |
|---|---|---|---|
| Buildings insurance | £480 | £365 – £670 | Per flat; rises with rebuild cost, claims and commercial units |
| Management fee (incl. VAT) | £420 | £300 – £540 | Per flat, with a minimum fee for small buildings |
| General repairs | £240 | £170 – £290 | Per flat; reactive, so allow a margin |
| Communal cleaning | £170 | £115 – £295 | Per flat, weekly service; small blocks from about £600 a year |
| Reserve fund | £170 | £110 – £360 | Per flat, where a reserve is collected |
| Communal electricity | £125 | £80 – £155 | Per flat; more where there is a lift |
| Gardens and grounds | £105 | £75 – £155 | Per flat, where there are grounds |
| Communal window cleaning | £65 | £50 – £90 | Per flat |
| Door entry system | £45 | £30 – £85 | Per flat; gates and CCTV add £1,000 to £4,000 a block |
| Fire risk assessment | £500 | £400 – £600 | Per building |
| Service charge accounts | £640 | £600 – £910 | Per building |
| Lift maintenance | £3,100 | £1,450 – £4,050 | Per building with a lift, before repairs |
Figures rounded. Per-flat figures are the budgeted cost divided by the number of flats. Source: Temphis-managed block budgets, October 2026. Buildings are not named.
Taken as a whole, the middle half of the blocks budget between £1,800 and £2,850 per flat a year, including insurance and reserves. The middle figure is £2,260, or about £190 a month. Buildings with lifts sit towards the top of that range; small converted houses with no lift and few shared services sit towards the bottom.
Where budgets are hardest to get right
Fixed contracts such as insurance, cleaning and management fees are easy to budget because the price is known in advance. Reactive headings are not. General repairs, door entry and gates, and lift repairs vary most from year to year, so the estimator sets them above the typical budgeted figure. If a budget allows very little for repairs, a balancing charge at year end is more likely.
How we build a budget
- Start from last year's actual spend, not last year's budget, so real costs carry forward.
- Price the contracts already in place: insurance renewal, cleaning, lift, fire safety servicing and utilities.
- Add the compliance calendar: fire risk assessment, electrical testing, asbestos and any building safety work due in the year.
- Set a repairs allowance from the last three years of reactive repairs, not from a round number.
- Plan the reserve fund against the roof, external decorations, lift and other major items the lease allows for.
- Share the draft with the directors or leaseholders before demands go out, and explain any increase line by line.
The rules that apply
A budget can only collect what the lease allows. Most leases let the landlord or management company collect an estimated sum on account and then balance up against the certified year-end accounts. The main legal points are:
- Reasonableness. Under section 19 of the Landlord and Tenant Act 1985, costs are only recoverable to the extent they are reasonably incurred, and works must be of a reasonable standard. Amounts demanded in advance must be no more than is reasonable.
- Consultation. Section 20 consultation is required before qualifying works costing any leaseholder more than £250, and before long-term agreements costing any leaseholder more than £100 a year. See our Section 20 guide.
- The 18-month rule. Under section 20B, costs generally cannot be recovered if they were incurred more than 18 months before they are demanded, unless leaseholders were told in writing within that time that they would be charged.
- Money held in trust. Service charge funds, including reserves, are held on trust for the leaseholders and should sit in a designated client account.
If you think a charge is too high, read our guide to challenging a service charge. For insurance in particular, ask for any broker commission to be disclosed; our insurance commissions guide explains why.
Questions people ask
What is a typical service charge for a flat?
In the blocks we manage, the middle half of buildings budget between £1,800 and £2,850 per flat a year, including buildings insurance and a reserve fund contribution. The middle figure is about £2,260 a year, or £190 a month. Buildings with lifts, staff, gates or large grounds cost more.
What is the biggest cost in a service charge budget?
Buildings insurance is usually the largest single heading, making up about a quarter of the total across our blocks. Management fees, general repairs and cleaning follow.
How much should go into a reserve fund?
Where blocks collect a reserve, the typical contribution is £110 to £360 per flat a year. The right figure comes from a planned maintenance plan that prices the roof, external decorations, lift and other major items over the next 10 to 20 years, and from what the lease allows.
Why did I receive a balancing charge?
A balancing charge means the building spent more than the on-account budget. The most common causes are reactive repairs, door entry and gate faults, lift repairs and rising energy costs. A budget built from actual spend rather than last year's budget reduces the risk.
Is the estimator a quote?
No. It is a guide based on real buildings. Your actual budget depends on your lease, the condition of the building, contracts in place and insurance history. We can review your current budget free of charge.
Want a second opinion on your budget?
Send us your current budget and last year's accounts. We will tell you which headings look high, which look too low, and what a realistic figure would be.
Request a budget review