Question 1

What is a service charge?

Accepted Answer

A service charge is an annual per-square-foot levy for building maintenance and shared facilities.

Question 2

How is it calculated?

Accepted Answer

Multiply the unit's square footage by the rate set by the owners' association for that building.

Question 3

Who sets the rate?

Accepted Answer

The owners' association sets the budget, subject to approval by the Real Estate Regulatory Agency.

Question 4

Are service charges deductible from yield?

Accepted Answer

Yes. Service charges reduce net rental income and therefore net yield.