The “15k” Service Charge Question: Are You Paying for Security or Just Cutting Grass?
It’s the end of the month. You’ve just paid your rent or mortgage. Then comes that other bill.
Service Charge: KSh 15,000.
You stare at the M-Pesa message and look out the window. You see a guard at the gate, a manicured lawn, and a swimming pool you use maybe twice a year. And you wonder: Where exactly is all this money going?
In Nairobi, service charges have become a massive point of contention. In some estates in Kitengela, it’s a manageable KSh 3,000. In high-end apartments in Kilimani or Westlands, it can easily hit KSh 25,000.
Is the difference just “branding,” or are you actually paying for something vital? Let’s pop the hood and look at the real math behind that monthly bill.
1. The “Big Three” Cost Drivers
If your service charge is high, it is almost certainly due to these three things. If your estate has them, you will pay for them.
- The Lift (The Silent Money Eater): A lift isn’t a one-time cost. It requires a mandatory annual maintenance contract (AMC) with certified technicians. If a part fails, it costs millions. If you live on the 10th floor, that high service charge is the price of not walking up the stairs.
- The “Backup” Lifestyle (Generators): We all hate blackouts. But that massive backup generator that kicks in within 10 seconds of a KPLC outage guzzles diesel. In a month with frequent blackouts, the fuel bill for a large apartment block can run into hundreds of thousands of shillings.
- 24/7 Professional Security: There is a difference between a “watchman” in a rungu and a contracted firm like G4S, KK, or SGA. Professional firms charge a premium for vetted guards, alarm response backup, and decent wages. If your estate has 4 guards per shift (day and night), that labor bill alone is massive.
2. The Invisible Costs: What You Don’t See
You see the grass being cut (landscaping), but you don’t see the Borehole Pump. Pumping water from 300 meters underground takes a lot of electricity. Often, 30-40% of an estate’s common electricity bill is just for moving water to your tap. You aren’t just paying for the water; you are paying for the energy to get it to you.
3. The “Sinking Fund”: Are You Saving for a Rainy Day?
This is the hallmark of a well-managed estate. A portion of your service charge (usually 10-15%) should effectively disappear into a Sinking Fund.
This is a reserve savings account for “major capital repairs” in 5 or 10 years.
- What happens when the borehole collapses?
- What happens when the entire building needs repainting?
- What happens when the electric fence needs replacing?
If your service charge is suspiciously low (e.g., KSh 2,000 for a complex with a pool), it usually means there is no sinking fund. When a major disaster happens, the management will hit you with a sudden, painful “special levy” of KSh 50,000 per house. A higher monthly charge often protects you from these shocks.
4. Red Flags: Are You Being Ripped Off?
While high costs can be justified, theft and mismanagement are real. Here is how to know if your service charge is being misused:
- The “Estimate” Game: The management cannot show you actual KPLC or water bills for the common areas and relies on “estimates.”
- No AGM / No Audits: Under the Sectional Properties Act 2020, the Owners’ Management Company (that’s you, the residents) has a right to audited accounts. If the management refuses to show where the money went, stop paying and call a lawyer.
- Deterioration: If you are paying KSh 15,000 but the pool is green, the lights are busted, and the security guard is asleep, you are not paying for service—you are paying for someone’s lifestyle.
Conclusion: It’s About Value, Not Price
A KSh 15,000 service charge is “cheap” if it guarantees 24/7 water, instant generator backup, tight security, and a sparkling clean environment. A KSh 3,000 service charge is “expensive” if you still have to buy water from bowsers and get robbed at the gate.
At Danco, we advise buyers to ask for the Service Charge Budget Breakdown before buying or renting. Don’t just look at the price tag; look at the value.