Rent buys the right to occupy your own unit. Service charge pays for everything outside its front door: security, common-area lighting, lifts, water pumps, refuse, cleaning, the caretaker, insurance of the structure, and the upkeep of whatever the block has in common.
It is the single most argued-about line on a Kenyan bill, and almost every one of those arguments comes from the same three failures.
The three things that make it defensible
Apportionment. How is the total split between units? By floor area, by number of units, by some other basis? Whatever the rule is, it has to be written down and applied consistently. A charge apportioned by a method nobody can state is a charge nobody can check, and an occupier who cannot check a charge will eventually decide it is wrong.
Statements that show the sum. A demand should show what was spent, on what, over what period, and how your share was derived from it. "Service charge: 8,000" is a figure. It is not an account.
Separation from rent. Service charge is not the landlord's income. It is money collected to be spent on the building. Folding it into rent, or into general revenue, removes any ability to demonstrate that it was spent on what it was collected for, which is exactly what an occupier is entitled to ask.
What normally sits inside it
- Security: guards, gate, alarm, lighting.
- Water: the borehole, the pump, tanker deliveries, the standing cost of supply.
- Common-area power and lighting.
- Lifts: service contract, power, repairs.
- Cleaning, grounds and refuse.
- The caretaker or site staff.
- Insurance of the structure, which is not insurance of anyone's contents.
- Maintenance of shared systems: pumps, tanks, drainage, gates.
Where a block also collects towards future major works, that belongs in a sinking fund and should be accounted for separately again.
A worked apportionment
A block of twelve units, total annual service charge budget KES 2,880,000.
Apportioned by unit, each unit pays KES 240,000 a year, or KES 20,000 a month, regardless of size.
Apportioned by floor area, with a total of 1,440 square metres, the rate is KES 2,000 per square metre per year. An 80 square metre unit pays KES 160,000. A 160 square metre unit pays KES 320,000.
Neither method is wrong. They produce very different bills for the same building, which is precisely why the method belongs in the tenancy agreement rather than in the manager's head.
Reconciliation, which is the part usually missing
A service charge is normally collected on a budget and spent on reality. At the end of the year the two differ.
A block that reconciles produces a statement comparing budgeted to actual, line by line, and either refunds the surplus, credits it forward, or collects the shortfall on a stated basis. A block that does not reconcile is collecting a figure that nobody has ever tested against what the building cost to run.
Ask for the reconciliation. If there has never been one, that is the finding.
What goes wrong
The budget never changes. A figure set four years ago and carried forward is not a budget, it is a habit, and it is usually now wrong in one direction or the other.
Capital works are funded from the operating charge. Replacing a lift out of this year's service charge means this year's occupiers paid for twenty years of lift. That is what the sinking fund exists to prevent.
The landlord's own costs drift in. Insurance of the structure is a legitimate shared cost. The landlord's income tax is not. A charge that has never been itemised is a charge where nobody can tell the difference.