The national minimum wage (NMW) increase for 2020, from £8.21 to £8.72 for employees over the age of 25, could result in higher service charges for tenants, according to property management business Ringley.
Following the pay rise of 6.2%, the highest since the introduction of the NMW in 1999, is needed, Ringley warns that property managers will likely raise service charges to cover the extra expense.
This issue may well be exacerbated due to cashflow worries for property management businesses caused by the COVID-19 crisis, which is in turn already affecting the financial confidence of tenants.
Ringley warned that these changes to service charges could be introduced as early as this month.
Mary-Anne Bowring, group managing director at Ringley, said: “No one doubts that Brits are deserving of a much needed pay rise and the hike to the national minimum wage will be welcome news for many.
“However, we should be mindful of the impact this will have…on both the 2.9m leaseholders and many businesses in these uncertain times.
“The increase in the national minimum wage will most likely have a knock-on effect for service charges payable by leaseholders.
“We are making all of our customers aware of where service charges will be increasing in line with the national minimum wage hike.”