Introduction

If you live in a leasehold flat or help run a residents’ management company, you’ll know that service charges are often a hot topic. But what about planning ahead for the big stuff? That’s where a capital expenditure plan, or CapEx plan for short, comes in. It might sound like jargon, but really it’s just a fancy way of saying: a plan for the big repairs and replacements that will come up over time. In this blog, we’ll look at what a CapEx plan is, why it’s useful, and how it can make life easier for everyone in the block.

What is a CapEx plan in leasehold property management?

A CapEx plan is a roadmap for the big costs that are likely to come up in the future. It usually lists things like roofs, lifts, boilers, or external painting – basically anything that will need replacing or major repairs at some point. The plan looks ahead, often 10 to 30 years, and works out how much money will be needed, and then enable directors of freehold management companies, resident management companies or right to manage companies to decide how much money should be collected as the CapEx plan suggests how many years they have left until the monies will be required.

Without a CapEx plan, big bills can land out of the blue. Imagine being asked to pay thousands for a roof repair with no warning – that’s exactly what a good CapEx plan helps avoid. A CapEx plan means directors of management companies are informed and can budget more accurately, they are also a good tool to share with leaseholders, so that they as service charge payers can see what’s coming and save gradually, rather than being shocked by sudden, huge demands.

Why do freeholders and resident management companies need a CapEx plan?

The CapEx plan sets out the expected costs, and then the reserve fund is built up through the service charges to cover them. It’s like using a shopping list to work out how much to save before you go to the supermarket. This way, the reserve fund isn’t just a random pot of money – it’s based on real, planned needs.

Who prepares a CapEx plan for a block of flats?

Usually, a chartered surveyor or property professional will prepare the plan. They look at the building, assess the age and condition of key parts, and then estimate when repairs or replacements will be needed. The surveyor will understand building pathology, the materials used in the building construction, their inherent characteristics and their lifespan. The Directors of resident controlled management companies need to work with professionals to make sure the plan is realistic, and to understand it so they can articulate what monies need to be collected and how quickly to leaseholders (the service charge payers).

The biggest benefit of a CapEx plan is peace of mind. Everyone knows what’s coming, there are fewer surprises, and the building is more likely to be well looked after. It also makes budgeting easier, helps avoid disputes, and can even make flats more attractive to buyers because it shows the block is well managed.

Can a CapEx plan help reduce disputes over service charges?

Yes, absolutely. Service charge rows often happen because people feel they’re being asked to pay escalating service charges without proper explanation. With a CapEx plan, leaseholders can see the long-term picture. It’s clear why money is being collected, and that makes people more likely to trust the process.

A CapEx plan might sound like something only big businesses need, but in reality it’s just common sense for blocks of flats. It keeps service charges fair, stops nasty surprises, and helps leaseholders feel more in control. For freeholders and resident management companies, it’s one of the best tools for keeping both the building and the community in good shape.

ServiceChargeSorted.co.uk Clients get access to a range of associated professionals well versed in everything from leasehold law and company law to contract administration, decorations, re-roofing, licences to alter and CapEx plans.

ServiceChargeSorted.co.uk offers a hassle free online service tailored to small blocks of flats. You input your budget, upload any invoices for repairs (say, a drainage fix), and the system handles banking, financial records, arrears chasing, legal paperwork, and annual service charge accounts—no managing agent required. Want to see how it works?