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Communal Service Charges In Cyprus

Below are questions which have been asked by many owners from development which we manage and by people who contact us for advice and/or to take over property management of their development communal areas, service and facilities.
 
Please fell free to contact us regarding any maters to do with property management of communal areas or communal service charges.
 
1) I own a house why am I being charged communal service charges?
2) How much should I pay?
3) What should communal service charges cover?
4) How should they be calculated?
5) My friend who lives down the road only pays €45 for his 2 bedroom apartment, why am I being asked for €95?
6) I only use my apartment for 6 weeks a year, why do I have to pay if I am not there?
7) If I knew how much the charge was, I would have never purchased this apartment, why was I not told?
8) I pay my service charges but I am now being asked to pay for work to the apartment block, why?
9) I rent out my apartment so the tenant should have paid.
10) I own an apartment on a complex which has 5 apartment blocks and for my two bedroom apartment I pay more then the owners of two bedroom apartments in other blocks on the complex, why?
 

I own a house why am I being charged communal service charges?

Communal service charges are paid by owners of any property which has shared communal areas, services or facilities.  If the property is in an apartment block it is 100% guarantied that there are communal service charge fees to pay.  What eludes most owners is when they purchase a house, if the house is part of a complex or estate and on this complex or estate there are communal areas, services or facilities which can be used by the house owners them communal service charges apply to their property and it is totally irrelevant whether they make use of the services or facilities.  In some cases the house might be on a private road this means the owners of houses on this road have to pay for the upkeep of the road plus the street lighting.
 
 

How much should I pay?

Many owners think that they are paying to much communal service charge and this is a fact, especially if the development is being managed by a management company, so they shop around for better deals.  Yes you can always find a company that will reduce the communal service charges but what most owners (around 80%) do not understand is the less you pay the less you get.  For any property management company (if they are a professional property management company) to asses what each owner needs to pay towards communal service charges they require all the facts about the development and/or at least two years expenditure accounts.  If they are a professional property management company there is only one way to calculate the communal service charges which each owner has to contribute and this way is via percentage ownership, which is fully outlined in the principle law governing properties with communal areas, services and/or facilities.
 
In Cyprus there has been a marked increase in property management companies most of them being unregistered illegal entities. Unfortunately even the ones that have bothered to register most of them do not have the experience, dedication of correct processes and procedures in place to be affective in safeguarding owners’ liabilities or investments.  Basically they are learning the job at someone else’s expense.
 

What shoud communal service charges cover?

The answer to this is very simple, everything that is communal, to include short, medium and long term maintenance, but invariably this is always a difficult question to answer especially if the property management company has not visited the site. It is also up to the owners to agree on what is going to be covered, the only item that is legally required as a minimum is the Communal utility bills, general functionality and upkeep of the development to include buildings/fire and public liability insurance.  If your development has a communal swimming pool it is also very important that this swimming pool is cleaned and maintained by a professional pool cleaning company whose operatives are quailfied certified swimming pool operators.
 
 

How should they be calculated?

If your apartment block is being property managed by a professional company what each unit needs to pay towards communal service charges should be calculated by the square meters of that unit (percentage ownership), but this is not always the case if the apartment block is being managed via a management committee or unprofessional property management company.  Management committees are normally influenced or managed by owners who own the largest units which have very large verandas, so charges are calculated via bedrooms rather than square meters.
Unprofessional property management companies also like to keep in with owners of large units because it is easier to collect if amounts are small rather then chase owners of large units for large amounts of cash.  One more major factor is, and it relates to both, management committees and unprofessional property management companies, they do not have a clue on how to calculate square meter totals or how to convert the square meter totals in to percentage ownership, so they charge via bedrooms, and this means that owners with small units are paying more then they should be paying.
 
 

My friend who lives down the road only pays €45 for his 2 bedroom apartment, why am I being asked for €95?

This is a very common question and scenario.  Communal service charge rates all depend on:
The total expenditure for service and facilities
By how many units the communal expenditure is being divided by
Total square meters of all units on a development
Percentage ownership belonging to each unit
What is covered within the communal service charges, in a few years time more then likely he will be asked to pay a very large sum for works that were not calculated by communal service charges in his apartment block.
Some property management companies charge lower rates to secure a contract and either increase the charges to a level that will cover expenditure or just walk away when they realise that they made a mistake.
 
What other people on other developments pay towards communal service charges should not and can not be used to influence what you need to pay, basically if you want to pay the same as your friends you need to purchase a property in their apartment block.
 
 

I only use my apartment for 6 weeks a year, why do I have to pay if I am not there?

Communal service charges are paid by all owners irrespective of whether they use their unit or not.  There are no provisions within the law to allow for a calculation or reduction in accordance to usage.  Even if you had a private house which had gardens and a swimming pool you would still have to maintain the house, the gardens and swimming pool even if you were only going to use it for six weeks out of the year.
 
 

If I knew how much the charge was, I would have never purchased this apartment, why was I not told?

When you viewed the apartment prior to purchasing you needed to ask the correct question before you sign that contract. 
 
Most people are more then happy when they walk around a development and see that the development has a gymnasium, a swimming pool, lush gardens and that the development is well maintained it is clean and tidy with everything as it should be.  The problem is these things are never factored into what they are actually purchasing.  Even when they view an apartment with a120 square meter veranda, they can see themselves and their friends lounging around in their own private space, popping down to the gymnasium and pool for a few hours before the barbeque on that 120 square meter veranda.  Developers/sales agents are there to sell you that dream; it is up to the purchaser to establish all the facts before they actually sign any agreement.
 
 

I pay my service charges but I am now being asked to pay for work to the apartment block, why?

This is common, especially if the development is being managed by a management committee or a non professional property management company.  These people tend to keep expenditure levels down to what is required at that moment of time rather then factoring in short, medium and long term requirements for the development.  The problem with this is when things need doing, work can not commence until the additional funds have been received, and if the funds required are for large jobs by the time funds have been collected something else has been affected, so the jobs are from that point of time ongoing (and most of the time) they are patched up rather then being fully repaired. The apartment block starts looking rundown becoming non functional within a very short period of time, and the people who complain the most are the people who did not contribute to the repairs.
 

I rent out my apartment so the tenant should have paid.

When most owners rent out their apartments they do not incorporate communal service charges into the rent, they have a contract which states that tenants have to pay the communal service charges, and this is done to make possible tenants think that they are getting the apartment at a cheap rate.  This is a very bad practice because if his tenants do not pay the communal service charges or if the owner does not collect them with the rent the person legally liable for communal service charges is the owner, irrespective of any private rental agreement which they might have with their tenants.
 
 

I own an apartment on a complex which has 5 apartment blocks and for my two bedroom apartment I pay more then the owners of two bedroom apartments in other blocks on the complex, why?

There are many reasons why this is so:
• On complexes which have more then one apartment block but have shared complex areas, service and facilities which all units from all apartment blocks can use, there are (dependant on the number of apartment blocks) different calculations which need to be calculated, one for each apartment block using only the units in that apartment block and then one for the complex using all the units on the complex. 
• Another factor that needs to be remembered is the square meters of your apartment, communal service charges should be calculated in accordance to the laws of that country and in Cyprus the law states that we calculate these charges using square meters not bedrooms.
• Past expenditure shows that your apartment block has higher electricity usage, and this is common especially if the other apartment blocks have a higher degree of non resident owners, less people use the lift, and internal communal lights don’t come on as often and so on.
 
If you fell that you are being overcharged you need to request for a detailed expenditure statement for your apartment block and developments communal areas.  If your development is being managed by a professional communal property management company this should be readly available.
 
 
Please fell free to contact us regarding any maters to do with property management of communal areas or communal service charges.