What does my service charge cover?

Section 18 of the Multi-Unit Developments Act 2011 is the legislation dealing with annual service charges.  The commentary below should be read in conjuction with the legislation.  

It might not be obvious what your annual service charges covers. In some estates, there is little or nothing to do but in others, there could be a lot of work to do and a lot of hidden charges that all the owners have no choice but to pay for.

Managing Agent fees

Unless it’s a very small estate or block, you’ll usually hire a company to do a lot of the leg work for you. This gives you one central point of contact, one person who knows all the finances and all the bills, someone for residents to ring and report problems, etc. This fee depends on the size of your complex, the amount of work involved, etc. It generally increases by 5% per year. For large complexes (over 200 units), a sample fee would be 150-180 per unit. Some services supplied by the managing agent will not be included in this. You should see them separately on your accounts, they could be things like company secretary, secretarial, out of hours service, etc.

Insurance – block and public liability

Since you don’t own the walls around your apartment, the underground car parks or the grass areas and footpaths, you don’t have to insure them like you would in a house. Instead the management company [b]must[/b] do this for you. This means that public liability, malicious damage, fires, leaks, etc are covered by the company.

Fire System maintenance

Fire systems break, people pull wires lose, things go wrong. You’ll need someone to examine your system and fix any faults. Generally this happens two or four times a year but there’ll be a budgeted amount for extra callouts if something happens in between those checks.

Electricity for common areas

This will cover things like lights in stairwells, lights in underground carparks, gates, intercom systems, outdoor lights, etc. In a lot of complexes, it can amount to tens of thousands of euros per year.

Sinking Fund

This is an amount of money put away for a rainy day. It means that when large expenditure is needed (for example to repair lifts or repaint the outer walls), people won’t be asked for a sudden hike in their service charges.

Cleaning

This figure depends on the estate or block. Generally it includes tidying the interior common areas and outside of the apartments

Waste disposal

Unless every has their own bin and uses bin tags, you’ll probably have a communal waste disposal company where the charge is split between all the units.

Window cleaning

Usually charged to people living above the ground floor because they can’t safely clean their own windows.

Accounting/Book-keeping

This service is usually provided by the managing agent but can sometimes be billed out.

Auditors

The owners (not the management company) hire an audit firm each year to examine the accounts and make sure they look okay before they’re submitted to the AGM and the CRO. It’s one of the ways the owners can ensure the company is being run properly.

CRO Fees

There are annual charges associated with filing returns, late fines, changing the names of the directors, etc.

Directors Insurance

This is an insurance policy that pays the legal costs of any court case your directors are involved in.

Landscaping

Grass needs cutting and unfortunately most councils will refuse to do it in a managed estate (Meath CoCo will refuse to cut it in an unmanaged estate!). This could also cover the cost of plating new plants each year.

Security

This is an option many larger estates like to have to discourage antisocial behaviour or crime.

Drains maintenance

In most estates, the council will refuse to maintain the sewage and rainwater drains under the apartments. This means you’ll have to have a support contract with a company who will keep an eye on them and clean them out when things go back.

Vermin Control

Depending on the location, you may need to set rat traps or poison boxes to keep vermin under control. It’s an unfortunate fact of city living.

Lift maintenance & support

They might be a life saver when the alternative is to haul your shopping up four flights of stairs but you don’t want to get stuck. If you do, you’ll be glad that your management company has paid for someone to be on the other end of the phone so they can come rescue you. Lifts, like everything else in life, require regular maintenance to keep them running. If you have a lift, expect high service charges – these guys don’t come cheap.

Gate maintenance

If you have gates, they’ll break down. An annual service charge means someone will come out to fix it quickly and without having to “order a part” which could cause delays.