Subletting flat; who pays service charge?

[GiantPanda]

Hi Everyone

I am due to complete on my first BTL property soon - a new build, leasehold apartment. My tenant is someone I know very well, but I have still insisted that we have an AST and inventory, which is drawn up and ready for us to sign, and we have informally agreed the amount of rent. I have also ordered the book "Renting out your property for dummies", and am waiting for it to arrive. In the meantime, I was hoping for some help with one concern I have.

I thought I'd done all my calculations re costs associated with letting out a property (for both tenant & landlord) before I even started down the BTL route and the deal stacked up in terms of covering my mortgage, and something left over for insurance, repairs etc. But although I was aware there would be a service charge payable, I've forgotten to factor the cost of it into the total costs. But my main dilemma is that I can't find out who would normally pay it - the landlord or the tenant. I have used the search function on this forum several times and gone through every thread it's returned and searched on Google, but I can't find the answer. I am REALLY sorry if I have missed it, but I would really appreciate someone helping me with the answer. I would also appreciate it if someone could point me in the direction of other useful sources of information for a novice like me, as well as the afore mentioned book. BTW, I think it's great that there are so many well versed and experienced landlords on this excellent site who are very helpful, and willing to help and give their time freely.

Thank you very much.

[MrShed]

Welcome! I THINK that it is up to the landlord to pay. But, I would imagine that you could pass this onto the tenant if you put it in your AST. But this really is just a guesstimate! And well done on getting that highly recommended book! To be honest if you stick to that and hang around on these forums, you shouldn't go too far wrong!

[GiantPanda]

Thank you very much for your reply MrShed!

[MrWoof]

As the lessee, you are responsible for the service charge, not the tenant. Obviously, the tenant pays whatever rent you set, you need to ensure that the rent is commercially right in terms of other similar properties and that your outgoings are covered. Bear in mind that there are plenty of other expenses in BTLs, insurance and repairs for example but BTL is a long term investment. Look on it as a minimum ten year investment and remember that over this period, property values rise, rents rise but mortgages stay pretty much the same. (Yes, interest rates vary but on the average, inflation takes care of that).

[GiantPanda]

Thank you too MrWoof for clearing that up.

[pms]

Welcome! I THINK that it is up to the landlord to pay. But, I would imagine that you could pass this onto the tenant if you put it in your AST. But this really is just a guesstimate! And well done on getting that highly recommended book! To be honest if you stick to that and hang around on these forums, you shouldn't go too far wrong!

But then if that was put into the AST for the tenant to pay the service charge would that not be an "unfair term" considering that it is most proberley written into the lease that the "leese" is responsible for the service charge.I don't think something like this you can pass on to the tenant as in law he/she would have a case.There is one way around it and that is to "bury" the charge when setting the rent.Most proberly get reprimanded for passing that bit of advice on.

[P.Pilcher]

It is normal for the landlord (who is the lessee) to pay all charges - ground rent and service charges associated with the lease. This is one of the costs which the rental income must bear. If the landlord obliged the tenant to pay these charges directly and the tenant defaulted, then the landlord could find the lessor taking acton to regain the property!

P.P.

[sundance]

The service charge will be in your name and you are responsible for maintaining the payments.Any arrears will be down to you I know because I once had to pay several years backlog after the tenant did a runner.

[jeffrey]

The service charge will be in your name and you are responsible for maintaining the payments.Any arrears will be down to you I know because I once had to pay several years backlog after the tenant did a runner.
Probably irrelevant as thread is over three years old.