What a service charge is actually for

Buyers ask what the service charge is. The more useful question is what it has been spent on, and the most useful question of all is what is in the reserve fund.

Three numbers, in order

• The annual charge, which tells you what the building costs to run today.
• The reserve fund balance, which tells you whether the next roof is already paid for.
• The last condition survey, which tells you when the next roof is due.

A block with a high charge and a healthy reserve is usually cheaper to own over ten years than a block with a low charge and nothing set aside, because the second one will ask for the money anyway and will ask for it all at once.

The Sablon pattern

In this quarter the split is predictable. The converted yard buildings carry lifts, plant and a concierge, and their charges look alarming next to the stone streets. They also carry funded reserves and recent surveys. The stone blocks are cheaper every month and occasionally present a bill that runs to five figures.

Neither is wrong. But a buyer comparing two apartments on monthly cost alone is comparing the wrong number, and we would rather put the accounts in front of them in week one.