Service Charge Budget Template and Review Checklist

A budget that says "Cleaning: £12,000" with no breakdown is not a budget

The service charge budget is the financial blueprint for your building. It sets out what each leaseholder will pay and what those funds will cover. Under the Landlord and Tenant Act 1985, service charges must be reasonably incurred and reflect a reasonable standard of service.

A clear, detailed budget is your strongest defence against unreasonable charges — and your best tool for demonstrating financial transparency to members. But a budget full of round numbers and vague line items is worse than no budget at all: it looks legitimate but offers nothing when challenged.

Service charge budget template

Budget review checklist

Before approving the budget, challenge every line:

• Compare against prior year actuals. Variances above 10% need an explanation, not just an adjustment.
• Check insurance renewal quotes. Insurance is often the largest line item. Get at least two quotes and verify the coverage scope.
• Review contract renewal dates. Cleaning, gardening, lift maintenance — are any contracts due? Build the tendered price in, not the expired one.
• Planned vs reactive repairs. A budget heavy on reactive repairs suggests poor planned maintenance. The reverse is healthier.
• Reserve fund adequacy. Does the contribution match the building's long-term maintenance plan? If there is no plan, start there.
• Management fee basis. Confirm how the fee is calculated and whether it has increased proportionately to the services delivered.
• Section 20 costs. Major works and improvements may need separate consultation. Do not bury them in the budget.

Red flags that should stop the budget

• Round numbers with no backup. "Cleaning: £12,000" without a breakdown of hours or contract terms is a number, not a budget.
• Large percentage increases. A 20% management fee increase with no change in service scope needs hard evidence to justify.
• Vague line items. "Sundries: £5,000" or "Contingency: £15,000" are guesswork unless itemised.
• Frozen budgets. A budget identical to last year with no inflation is suspicious unless costs are locked by a fixed-term contract.

Track actuals against budget in LeaseholdConnect

A template gets you started, but the real value is tracking spend against budget through the year. LeaseholdConnect gives treasurers a dedicated workspace to create budget lines, upload supporting documents, set approval workflows, and compare actuals.

When it is time to present the annual accounts, you can export a complete financial pack with all supporting evidence. No more hunting through email attachments and shoe boxes of receipts.

Create your free workspace and take control of your service charge budget.