What is the difference between 'management fees' and 'service charges'?

The distinction between management fees and service charges lies in their specific purposes and applications within property management. Management fees are payments made to property managers for their services in overseeing the operational aspects of a property. This can include tasks such as tenant relations, rent collection, and general administrative duties. Essentially, management fees are compensation for the management team's expertise and oversight.

On the other hand, service charges pertain to various costs incurred for the upkeep and maintenance of the property itself. These charges typically cover services like cleaning, landscaping, repairs, and other operational expenses needed to maintain the property’s condition and ensure a pleasant living environment for tenants.

Understanding this difference is critical in the field of leasehold management as it directly impacts financial planning and budgeting for both property owners and tenants.