Service Charge Budget vs Actual Spend

Who this is for

Buyers, investors and advisers checking whether the current quoted service charge is realistic or just a provisional budget.

Why it matters

A current budget can look affordable while previous actual spend shows recurring overspends. The risk is not only the number quoted by the estate agent; it is whether actual building costs repeatedly exceed what leaseholders were told to expect.

What to check first

• Place at least two years of actual accounts beside the current budget.
• Compare major cost categories: insurance, management, repairs, utilities, cleaning, lift, fire safety and reserve contributions.
• Check whether balancing charges or credits followed earlier budgets.
• Look for one-off works that were removed from the budget rather than resolved.
• Ask whether the current budget is final, draft or still awaiting year-end adjustment.

Red flags in the pack

• Actual spend exceeds budget in consecutive years.
• Current budget excludes known repairs or consultation items.
• Insurance or utilities rise sharply with no explanation.
• Balancing demands appear repeatedly.
• Reserve contribution is cut while major works are being discussed.

Evidence to gather

• Last 2-3 years certified accounts or income/expenditure statements.
• Current service charge budget and demand.
• Notes explaining variances and balancing charges.
• Reserve fund statement and planned maintenance notes.

Questions to send

• Please explain the largest budget-to-actual variances in the last three years.
• Is the current budget final, and does it include all known works and insurance changes?
• Were any balancing charges or credits issued after the last accounts?
• Are any expected costs being deferred beyond the current budget year?

How LeaseLens uses this

LeaseLens extracts budget and actual figures, compares year-on-year movement and creates a question set around unexplained variance.

Official context

• LEASE: service charges
• LEASE: reserve or sinking funds

Caution

This is an informational screening guide only. It is not legal advice, does not interpret your lease for you, and does not replace advice from a qualified conveyancer or solicitor.