Knowledge Centre
Find the meaning of various terms related to renting & letting here.
When renting a new home, there's more to consider than simply picking a property and moving in. Especially when you're searching for a rental for the first time, there are several things to keep in mind. If you're new to the world of renting, you'll likely come across terms you're not familiar with, such as delivery condition, rent protection, and the rent tribunal. These are terms you really should know when you're renting a place on your own, as it's likely you'll deal with one or more of these aspects.
Service charges
What does this entail?
When you are renting a property, understanding the financial aspect is crucial. You might be leaving your parental home and suddenly face a significant expense. Or perhaps you're downsizing and looking for a different rental property. Hence, it's essential to keep a clear overview of your expenses against your income. As a tenant, your expenses can be both one-time and monthly. Examples of one-time expenses include paying the deposit or agency fees. Monthly payments mainly involve rent, including service costs. As a tenant, it's nice to know exactly what you're paying for. Often tenants are unaware of what service costs cover and whether the price is reasonable. Here you can learn more about what service costs are and what they cover.
What are service costs?
Service costs are additional to the basic rent of a property. They are charged for maintaining and using the property. You can see it as your monthly rent being split into two parts: basic rent and service costs. These service costs are not extra but are included in the rent price.
What is included in service costs?
Service costs are divided into several categories that collectively form the service costs. The most well-known and common category under service costs is energy. Without gas, water, and electricity, we wouldn't manage, so these are settled monthly within the service costs. These are tracked via a meter and billed accordingly. If you live in a shared house with friends or other housemates, like student housing, the landlord can choose to allocate energy costs individually or use a distribution key. A distribution key means the costs are equally divided among residents.
Additionally, costs for housing, materials, and the caretaker’s salary are also part of service costs. This includes expenses the landlord incurs to perform work in the house. These involve maintenance, cleaning, and (small) repairs. For example, hiring a cleaner and/or handyman. If tenants choose to take on these tasks themselves, service costs will be lower.
There are also administrative costs counted in service costs, though this is a minor amount. Administrative costs can be up to 5% of the total service costs. Additional charges can also be made for using furniture or furnishings, applying if you rent a furnished or semi-furnished space.
What is not included in service costs?
There's often a misconception that healthcare service fees, taxes, and levies are counted as service costs, which is not the case. However, the landlord can pass on certain taxes and levies to tenants, but this is not done through the service costs. Instead, they have a separate designation in the lease agreement.