How is the Service Charge calculated?

Understanding Your Service Charge

At Premier Estates, we manage your development, and it is the responsibility of all property owners to fund that management through Service Charge payments. These charges are the only source of funding for the services we provide.

How Your Account Works

Before we begin managing a development, we open a trustee-status bank account in the name of that specific development. This account starts with a zero balance and cannot be overdrawn. Until owners pay their Service Charges, we cannot use this account to pay for services.

All Service Charge payments and other receipts are deposited into this account. We also use the same account to pay for the services provided. Legislation protects the funds in your development’s account—they are kept entirely separate from other developments and Premier Estates’ own finances.

Each year, an independent chartered accountant reviews the transactions for your development. Depending on your Lease, these accounts are either audited or certified as accurate.

Because each development has its own bank account and relies on available funds to function, your Lease requires Service Charges to be paid in advance.

Why Timely Payment Matters

You must pay your Service Charges on time. Without prompt payment, we may not have enough funds to continue delivering services to your development. If this happens, services may be reduced or withdrawn.

To prevent this, Premier Estates follows a strict arrears procedure for owners who do not pay their charges when due.

How We Calculate Your Service Charges

Annual Estimates

At the start of each financial year, we prepare a Service Charge Estimate based on your Lease or TP1. This estimate outlines the anticipated costs for maintaining your development. We use our experience and available data to make this as accurate as possible.

In the first year of management, we may not have historical figures to draw from. As a result, your initial estimate may not precisely reflect actual costs—but it provides a fair and reasoned starting point.

Owner Contributions

Each owner contributes a set percentage of the total estimated costs. Your Lease or TP1 will detail this percentage and the frequency of payments. These are known as Service Charges “on account.”

Reviewing Actual Expenditure

Year-End Accounts

At the end of each financial year, we prepare a full set of Service Charge Accounts. This includes an income and expenditure report, as well as a balance sheet. An independent chartered accountant either certifies or audits these accounts, as required by your Lease.

We then compare the actual spending against the original estimate.

Handling Surpluses and Shortfalls

Your Lease or TP1 will explain how we manage any overspend or underspend. In some developments, the balance is rolled over into the next year’s estimate, adjusting the amount payable accordingly. In others, we issue a balancing credit or levy.

If we spent less than estimated, you receive a credit on your Service Charge account.

If we spent more, you receive an invoice for your share of the shortfall.

Premier Estates’ Remuneration

The only money Premier Estates retains is the Management Fee, which appears as a single line item on your Service Charge Estimate. This fee is a fixed annual amount. It does not increase if the cost of maintaining your development rises—our fee remains the same regardless of actual expenditure.

Need more information?

For further details on what happens if your Service Charges remain unpaid, please see our related FAQs:

What happens if you don’t pay your service charges?

Struggling to pay your service charge?

If you believe you have been charged in error or need help understanding your account, please contact our Accounts team on 0345 491 8898 or speak to your Estates Coordinator.