Management Company Service Charges: Income and Expenditure
An interactive Excel document is available to summarise and outline the typical categories of income and expenditure that a management company may have.
Before downloading the Excel document (see bottom of this page) you may wish to read the following explanatory notes.
About the spreadsheet
This document is intended for anyone living in a multi-unit development where there is a property management company in operation.
The principle purpose of the management company is to own the common areas and ensure that they are well maintained. To maintain the common areas of the development, owners generally pay an annual fee known as a service charge to the management company.
The contract to purchase the unit will set out what the service charge fee is and how it has been apportioned to owners.
The level of service charge that owners pay will generally depend on the type of services the management company decides to undertake.
It is up to the directors of the management company to decide the service charge. Service charge payments may vary from year to year due to inflation and new/additional services being provided.
While the directors may be advised and guided by the managing agent, ultimate responsibility for setting and collecting service charges lies with the management company.
Information to seek
If you are a member of a management company, you should require the company to provide information to substantiate the level at which the service charge is set.
The management company should provide you with as much practical information as possible with regard to how the service charges budget will be spent and how the service charge for the forthcoming year has been calculated.
The two main components in the service charges budget are income and expenditure. Income will generally largely be made up of the annual service charge fees paid by owners, with expenditure on services to maintain the common areas its main expenditure.
A transparent budget process enables the management company’s activities to be monitored and understood by all of the members and can help alleviate member concerns with regard to how the service charges budget is being spent and ascertaining value for money.
Typical categories
Through the work of the Multi-Unit Development Stakeholder Forum, the National Consumer Agency has developed this interactive Excel document to summarise and outline the typical categories of income and expenditure that a management company may have.
In addition to explaining some of the key budget headings, it will also generate detailed and core budget results where data is entered.
It is designed to be adapted by a management company to use to show owners where the service charge money is being spent and how the proposed service charge budget has been calculated.
Compliance
Management companies are advised to seek professional advice when setting up their accounting and internal financial control systems in order to ensure that the systems implemented enable the company to comply with legal reporting requirements in this regard.
This document may not address all of the specific circumstances of a particular company.
It is presented for information purposes only and does not constitute financial advice or supersede any existing accountancy standards or company law reporting obligations.
Downloads
Download the income and expenditure spreadsheet (Excel file, 75KB)