Society maintenance charges: how they are calculated
Maintenance is the largest recurring cost of owning a flat after the loan, and almost nobody examines the bill. It is not one charge but a set of separate heads, computed on different bases, some of which a society may not vary at will. Reading it properly tells you a great deal about how the building is run.
It is not one charge
A maintenance bill combines several distinct heads: service charges, property tax, water charges, contributions to the repair fund and sinking fund, insurance, lift and common electricity, and any non-occupancy charge.
Each is computed on its own basis, and the bases differ. That is why two flats of different sizes in the same building may pay less differently than owners expect.
Model bye-laws under the co-operative framework set out the heads and how each should be apportioned, and a society's own registered bye-laws follow from them.
A society issuing a single undifferentiated figure is not following the framework, and asking for an itemised bill is a reasonable request that occasionally produces interesting answers.
- Service charges, tax, water, repair and sinking funds, insurance, utilities
- Each head has its own basis of apportionment
- Model bye-laws set out the heads and the method
- A single undifferentiated figure is a warning sign
The apportionment that surprises people
Service charges, which cover the society's administrative and establishment costs, are conventionally divided equally among flats rather than by area.
That means a small flat and a large one in the same building pay the same service charge, which owners of smaller flats frequently find unfair and owners of larger ones consider obvious.
Other heads work differently. Contributions to the sinking fund and repair fund are generally computed with reference to construction cost, and property tax follows the assessment on each flat.
Water charges typically follow the number of inlets or actual consumption where metered. Understanding which head is doing what is the key to reading a bill.
The funds that matter most
The sinking fund exists for major future work: structural repairs, replacement of lifts, plumbing renewal. A society with a healthy sinking fund has been managed properly.
The repair fund covers ongoing and periodic maintenance rather than capital work, and the two should not be confused.
A society that keeps contributions artificially low to please members is deferring cost rather than avoiding it, and that deferred cost arrives eventually as a large special levy. Buyers frequently complete just before one, which our resale flat checklist covers.
So a lower maintenance charge is not automatically better. A building with low charges and no reserves is a worse proposition than one with higher charges and money in the bank.
- Sinking fund for major capital work
- Repair fund for ongoing and periodic maintenance
- Artificially low contributions defer cost, they do not remove it
- Low charges with no reserves is a warning, not a saving
Non-occupancy charges
Where a member lets their flat rather than occupying it, societies commonly levy a non-occupancy charge, and this is the head most frequently abused.
The charge is capped, and societies levying substantially more than the permitted amount are exceeding their authority. This has been litigated and the limit exists precisely because the practice was abused.
Confirm the current cap rather than accepting a figure, and ask for the resolution and bye-law provision relied on where a demand looks high.
Our note on what society rules can and cannot enforce covers the general principle that a majority vote does not create authority a society does not have.
What a society may not do
It may not levy charges outside the heads its bye-laws provide for, however the general body voted.
It may not use maintenance to penalise members selectively, or apply different rates to comparable flats without a basis in the bye-laws.
It may not make voluntary contributions a condition of services or transfers, as our note on society transfer and NOC covers.
Where a demand appears irregular, ask for it in writing with the head, the basis and the resolution. A society operating correctly answers immediately; one that cannot is usually the one that needed asking.
What buyers and tenants should check
Buyers should ask for a recent itemised bill rather than a headline figure, and should specifically ask about planned works and the sinking fund position. That single question predicts future cost better than anything else available.
Amenity-heavy projects carry proportionally higher maintenance, and the charge scales with clubhouse, pool, gym and landscaped grounds. Our note on which society amenities are worth paying for covers whether that spend earns its keep.
Tenants should establish whether maintenance is included in the rent or billed separately, and whether any non-occupancy charge is being passed through. Our tenant's guide covers what to agree in the document.
Landlords should factor maintenance into net yield rather than gross, since it falls on the owner between tenancies regardless.
- Buyers: ask for an itemised bill and the sinking fund position
- Amenity-heavy projects carry proportionally higher charges
- Tenants: establish inclusion and any pass-through
- Landlords: maintenance belongs in net yield, not gross
Getting a bill explained
Members are entitled to understand what they are paying for, and a well-run society explains readily.
Ask for the head-wise breakdown, the basis of apportionment for each head, and the resolution authorising any charge you do not recognise.
Attend the general body meeting where the budget is approved. Most complaints about maintenance come from members who were not there when the decisions were made, and the people who show up set the costs everyone pays.
Where a genuine irregularity persists, the co-operative framework provides for complaints to the Registrar, which is a better route than an escalating argument with the committee.
