Service charge is an annual fee, charged per square foot, that covers the upkeep of shared building and community facilities — security, landscaping, pools, gyms, lifts, and building insurance. It is set by the building management or owners' association and billed regardless of whether the unit is owner-occupied, rented, or vacant.
Why It Matters
- —Service charge directly erodes net rental yield — always model it into return calculations, not just the gross rent.
- —Rates vary widely by building quality and amenity level — a high-amenity tower can carry a service charge 2–3x that of a basic mid-rise.
- —In leasehold markets, service charge is contractually distinct from — and additional to — ground rent.