How is the Service Charge calculated?

Understanding your Service Charge
Premier Estates is responsible for managing your development and you and the other owners are responsible for funding that management. The only money that will ever be available to be spent providing services to your development are those supplied by the owners by way of Service Charges payments.
Before Premier Estates starts to manage your development a trustee status bank account is opened specifically in the name of your development.
On the day the bank account is opened it has no money in it and until owners pay their Service Charges it remains with no money in it. This bank account cannot go overdrawn and we cannot order services unless there is enough money in your account to pay the resultant invoice.
All Service Charges and other receipts are paid into your trustee status bank account and all payments for services are made from this account. Legislation dictates that the funds within this bank account are acknowledged as belonging to your development and cannot be confused with those of other developments or those of Premier Estates.
Each year the transactions that have taken place through this trustee bank account are reviewed by an independent chartered accountant and, dependent upon the terms of your Lease, are either audited by them or certified as being correct.
It is because your development has its own trustee bank account which requires positive cash flow to operate that your Lease requires you to pay Service Charges in advance of the services being delivered.
This is also the reason why it is very important that you pay your Service Charges promptly when due.
If your Service Charges is not paid on time it is likely to result in us having insufficient money available to continue to provide services to your development, which will therefore result in services being withdrawn.
For the above reasons, Premier Estates has in place a robust arrears procedure that will be implemented against anyone who does not pay their Service Charges when due.

Service Charge Calculation
Your Lease/TP1 prescribes that at the commencement of each financial year Premier Estates prepares an estimate of anticipated expenditure for the financial year in question.
The Service Charges Estimate that is prepared at the beginning of the financial year is prepared using all Premier Estates’ experience to ensure it represents a true picture of the development’s total costs for the year.
Please note it is an estimate, and for the first management year especially, cannot be based upon actual figures relating to the development.
Therefore, although our aim is to produce a Service Charges Estimate that is as accurate as possible, this cannot be absolutely guaranteed.
Each owner is then required to contribute a set percentage of the total estimated expenditure at frequencies set out in their Lease/TP1. These are known as payments of Service Charges on account.

At the end of each financial year a set of service charge accounts are prepared, including an income and expenditure account and balance sheet.
Dependent upon the terms of your Lease, these accounts are either audited or certified as being correct by an independent chartered accountant.
The actual expenditure incurred in managing the development is compared against our original estimate.
The terms of your Lease/TP1 will then outline how any overall underspend or overspend is to be handled. In some instances the Lease/TP1 will require that the overall balance for the financial year be carried forwards into the Service Charge Estimate for the next financial year. The overall service charge payable for that year will then increase or decrease accordingly.
Alternatively, the Lease/TP1 may require that the overall balance for the financial year be settled by way of a balancing credit or levy.
If we have spent less than anticipated, then each owner will receive a credit against their service charge account. If we have spent more than we estimated, each owner will receive an invoice for their share of the shortfall.

Premier Estates’ Remuneration
One line on your Service Charges Estimate will be Management Fees. This is the only money paid by you that is retained by Premier Estates, everything else is spent providing services at your development. Management Fees are based upon a set fee per annum. Therefore, if Premier Estates spends more on maintaining your development it does not mean that Premier Estates is paid more.