Service Fee in a New Build: What You Pay For and How to Compare

What is a service charge and why it matters 🏙️

A service charge is a regular payment that covers the operation and upkeep of shared areas in a new building. It’s not a tax or a fee for your apartment itself, but a contribution to services such as cleaning, security, waste removal, lift maintenance, and shared utilities.

Typical items covered

• Daily maintenance: cleaning, lighting of common areas, lift servicing.
• Security: guards, access control, CCTV.
• Shared utilities: water and electricity in corridors and public spaces.
• Routine and larger repairs of communal parts of the building.
• Administration: management company fees, accounting, insurance.
• Reserve fund: savings for major repairs or unexpected costs.

How service charges are calculated 🔎

Developers and management companies use different methods:

• Per square metre: a common approach where larger apartments pay more.
• Fixed fee per unit: simpler but may be unfair for apartments of different sizes.
• Hybrid tariffs: a base fee plus supplements for extra services (concierge, parking).

Ask for a detailed breakdown — which services are included, what is charged separately, and whether VAT or taxes apply.

How to compare offers effectively 🧭

1. Compare the list of services, not only the total amount. Identical sums can hide different service levels.
2. Normalize fees by converting to cost per m² if unit sizes differ.
3. Check the rules and transparency of the reserve fund — who controls it and how it is spent.
4. Learn which management company will run the building and check their track record.
5. Ask if the charge is index-linked — it may increase over time.

Questions to ask the developer or manager

• Can you provide a recent monthly cost breakdown?
• What exactly is included and what is extra?
• How is the reserve fund formed and who manages it?
• Is the management company fixed or can residents change it?
• Are there penalties for late payment and how are they applied?

Red flags 🚩

• No transparent cost estimates.
• Frequent changes of the management company or unclear responsibilities.
• No established reserve for future major repairs.
• Very low initial fees that promise many services — this could lead to later surprise levies.

Practical tips for buyers and investors 💡

• Request the service contract and reserve fund regulations before signing handover documents.
• Inspect common areas during a visit: lighting, lifts, doors, CCTV and cleanliness.
• If buying to rent out, balance service charge level against rental potential — higher charges can be offset by higher demand for quality buildings.
• Negotiate inclusion/exclusion of services such as parking or private storage into separate contracts.

A simple comparison approach (example)

• Unit A: charged per m² with cleaning, security, waste and technical maintenance included.
• Unit B: fixed fee per apartment but parking and reserve fund not included.

Convert both to a per-m² basis and check the small-print to reveal hidden costs.

Final thoughts and next steps ✅

A clear and fair service charge is essential for trouble-free ownership. Ask for full documentation, compare several offers and evaluate the transparency of the management. If you need help obtaining documents or comparing real options, our BuyHome specialists are ready to assist you in choosing the right property based on total running costs. https://buyhome.ge/en