Service charges: what you are actually paying for

Purchase price is negotiated once. Service charge is paid every month for as long as you hold the property, and over a ten-year hold it can amount to a meaningful fraction of what you paid. It is also the number buyers ask about last, usually after the decision has effectively been made.

What it covers. Security, cleaning and grounds, lift maintenance, common-area power and water, borehole and pump servicing, generator fuel and servicing, insurance of the structure, and management. Some of these scale with the size of the development and some do not, which is why a small scheme can carry a higher charge per square metre than a large one with the same amenities.

The sinking fund is separate, and it matters more. This is the reserve for things that fail on a long cycle — lifts, the generator, the roof, external redecoration. A development without a funded reserve is not cheaper to run; it has simply deferred the bill into a special levy that will land on whoever owns the unit at the time. Ask what the reserve holds and what the contribution rate is.

Amenity is a recurring cost, not a feature. A pool, a gym and a landscaped court are pleasant and they are also three staffed, serviced, insured liabilities. They are worth having if they are used and if the charge is understood. On a scheme where amenity was specified to sell units rather than to be used, the owners fund it indefinitely regardless.

Ask for the actual figures from a comparable completed scheme, ideally by the same developer or manager, expressed per square metre per month. A projection for a building that does not exist yet is an estimate made by the party selling you the unit. A neighbouring building's audited accounts are evidence.

Check how it is governed. Who sets the budget, who approves it, whether owners have a vote, and how the manager is appointed and removed. A well-governed development with a slightly higher charge is a better proposition than a cheap one nobody can hold to account.

The right question is not whether a service charge is high, but whether the development is being run properly and whether the charge reflects that. Those have different answers, and only the second one predicts what the property will be like to own.