Shared Ownership and Service Charges: What You Need to Know Before You Buy
What Are Service Charges?
Service charges are payments you make to cover the running and maintenance costs of your building or development. They’re common with flats, but they can also apply to houses on estates with shared spaces. Think of them as a contribution to keep your home and its surroundings safe, clean, and functional.
What Do Service Charges Usually Cover?
Service charges vary depending on the property, but they often include:
- Maintenance of communal areas - e.g. hallways, gardens, lifts.
- Repairs - general upkeep of shared spaces or building systems.
- Cleaning services - for communal areas like stairwells or lobbies.
- Buildings insurance - covering the structure of the property (not your personal contents).
- Lighting and utilities - for shared areas.
- Reserve/sinking fund contributions - money set aside for big future repairs (like a new roof).
Why They Matter in Shared Ownership
Service charges are an ongoing cost, alongside your rent and mortgage. For some buyers, they can be a surprise, especially if you’ve only budgeted for the mortgage and rent. When buying a shared ownership home, you'll find a breakdown of the costs in the Key Information Document, or KID as they're known, which will also include a forecast of future costs. It's worth noting the forecast is an estimate, but it will help for you to plan.
If you were buying a leasehold home on the open market, a flat for example, it's worth noting service charges would be applicable, and how and when they rise is the same for these leaseholders as they are for shared owners. How these costs rise will depend on several factors, and its always advised you get legal advice from your conveyancing solicitor to ensure you understand the ownership of the building and development you are buying your shared ownership home in, as this can also impact your costs.
If you were buying a leasehold home on the open market, a flat for example, it's worth noting service charges would be applicable, and how and when they rise is the same for these leaseholders as they are for shared owners. How these costs rise will depend on several factors, and its always advised you get legal advice from your conveyancing solicitor to ensure you understand the ownership of the building and development you are buying your shared ownership home in, as this can also impact your costs.
How Much Are They?
Service charges can range anywhere from £50 to £200+ per month, depending on the property. New-build developments with lots of facilities (like gyms, concierge services, or landscaped gardens) will usually cost more.
Tips for Managing Service Charges
- Budget realistically – factor service charges into your monthly costs from the start - these are included in your affordability assessment from the beginning.
- Ask questions – request a breakdown so you know exactly what you’re paying for, and ask questions if you're unsure or need more clarity.
- Check the reserve fund – make sure there’s money put aside for major works.
- Plan for increases – assume charges may rise each year.
Service charges aren’t the most glamorous part of shared ownership, but they’re an important one. Remember, always ask questions if you're unsure.