In short
A service charge budget should cover insurance, utilities for the common parts, cleaning and grounds, repairs and maintenance, safety compliance, service contracts, professional fees, management fees and a reserve fund contribution. Each figure should be traceable to a contract, a quote, a certificate schedule or last year's actual spend.
The typical lines
| Buildings insurance | Usually the largest single line. Based on the renewal quote or a realistic estimate of it. |
|---|---|
| Communal electricity and water | Lighting, lifts, door entry, pumps and any communal supply. |
| Cleaning and grounds | From the written contracts, including window cleaning and gardening. |
| Repairs and maintenance | An allowance for reactive repairs based on actual history, plus any planned items for the year. |
| Safety and compliance | Fire risk assessment, fire alarm and emergency lighting servicing, water risk assessment, EICR, asbestos re-inspection, lift inspections: timed to their due dates. |
| Service contracts | Lift maintenance, door entry, CCTV, pest control and similar. |
| Professional fees | Accountant's certification of year-end accounts, company secretarial costs, reinstatement valuation where due. |
| Management fee | As set out in the management agreement. |
| Reserve fund contribution | Where the lease allows, set from the planned maintenance plan. See reserve funds. |
How each line should be estimated
Contracted items should match the contract. Compliance items should match the compliance register: if the EICR is due this year, it must be in the budget. Repairs should reflect what the building has actually spent over the last two or three years, not a hopeful round number. Anything unusual should have a note explaining it.
Warning signs
- Every line has gone up by the same percentage.
- There is no reserve fund contribution, even though the roof or windows are old.
- Safety checks that are due this year are missing.
- The repairs line is lower than last year's actual spend with no explanation.
- The budget arrives after the start of the service charge year.
How budgets should be agreed
The agent should prepare a draft two to three months before the year starts, walk the directors through it line by line, and send leaseholders a clear version with the demand. Directors should be able to see the working behind every figure. At EKIN it is shared with the directors alongside the budget.
Last reviewed 2026-09-23 against the sources listed. This page is general information about England and is not legal advice; the lease for your building always comes first.