Service charge is the number that decides whether a Lagos apartment is a good investment or an expensive mistake, and it is the number almost nobody publishes. Buyers negotiate hard on price, then discover after completion that the building costs another several million naira a year to live in.
This report sets out what service charges actually run across BCR’s five coverage corridors, what each tier of charge buys you, and how to work out the real number before you commit. It is written for buyers in the ₦250M and above segment, where service charges routinely exceed the total annual rent on a mainland apartment.
Service charge as a share of annual rent across Lagos apartments. Lightly serviced estates sit near the bottom of that range. Prime serviced towers in Ikoyi and Victoria Island sit at the top, and a handful exceed it.
What a service charge actually covers
A service charge is the annual sum every unit owner pays into a common pot that runs the building. It is not rent, it is not a tax, and it does not build equity. It is the operating cost of the shared parts of the property, divided among owners.
In Lagos, that pot typically funds the following. The proportions matter, because the single largest line is almost always power.
| Cost line | Typical share of the charge | What it pays for |
|---|---|---|
| Power generation | 40–60% | Diesel or gas for generators, inverter and battery maintenance, solar upkeep where installed, and the grid bill itself |
| Security | 10–20% | Guards across three shifts, CCTV monitoring and maintenance, access control, perimeter systems |
| Facility management | 8–15% | The management company’s own fee, on-site staff, administration |
| Water and sewage | 5–12% | Borehole operation, treatment plant, sewage evacuation |
| Cleaning and waste | 4–8% | Common area cleaning, landscaping, LAWMA and private waste collection |
| Lifts and plant | 4–10% | Lift service contracts, pumps, HVAC in common areas, fire systems |
| Amenities | 3–10% | Pool chemicals and staffing, gym equipment servicing, lounges |
| Sinking fund | 0–10% | Reserve for major works: lift replacement, roof, facade, generator overhaul |
Proportions are indicative of professionally managed premium buildings in Ikoyi, Victoria Island and Banana Island. Buildings without a sinking fund line are common in Lagos and carry a specific risk covered further down this page.
What service charges cost by corridor
The table below sets out the ranges we see across the five corridors BCR covers. Read these as ranges, not as quotes. Two towers on the same street can differ by 100 percent depending on power strategy, amenity load and how honestly the budget is set.
| Corridor | 1–2 bedroom | 3 bedroom | 4 bedroom and above | Typical share of rent |
|---|---|---|---|---|
| Ikoyi (serviced) | ₦2.0M – ₦3.5M | ₦3.5M – ₦6.5M | ₦6.0M – ₦9.0M | 15–25% |
| Banana Island | ₦2.5M – ₦4.0M | ₦4.5M – ₦7.5M | ₦7.0M – ₦12.0M | 12–20% |
| Victoria Island (serviced) | ₦1.5M – ₦3.0M | ₦2.5M – ₦5.0M | ₦4.0M – ₦8.0M | 12–22% |
| Oniru | ₦1.2M – ₦2.5M | ₦2.0M – ₦4.0M | ₦3.5M – ₦6.0M | 10–18% |
| Lekki Phase 1 | ₦0.8M – ₦1.8M | ₦1.5M – ₦3.0M | ₦2.5M – ₦4.5M | 8–15% |
Ranges are annual, per unit, and reflect serviced developments with generator or hybrid power, security and managed common areas. Non-serviced walk-up blocks fall well below these figures. Figures are indicative ranges compiled from BCR corridor research and market observation, not a quotation for any specific building. Always request the actual budget for the building you are buying into.
What you get at each service tier
Comparing two service charges without comparing what they include is meaningless. A ₦2M charge with 12 hours of power is more expensive in practice than a ₦4M charge with 24 hours, because you fund the gap yourself. Use this to place a building in its tier.
| Feature | Tier 1: Basic | Tier 2: Standard serviced | Tier 3: Full premium |
|---|---|---|---|
| Indicative annual charge, 3-bed | ₦800K – ₦1.8M | ₦2.0M – ₦4.0M | ₦4.5M – ₦8.0M |
| Power | Common areas only, resident funds own supply | 12–18 hours shared supply | 24 hours, often hybrid solar plus gas |
| Security | Gate guard, single shift | 24-hour guards, CCTV at entry | 24-hour guards, full CCTV, access control, patrols |
| Water | Borehole, untreated | Borehole with basic treatment | Full treatment plant, potable standard |
| Lifts | Often none, or ad hoc repair | Serviced under contract | Contract with response SLA, standby power |
| Amenities | None | Gym or pool, basic upkeep | Pool, gym, lounge, landscaped grounds, staffed |
| Management | Informal or resident committee | Third-party facility manager | Professional FM with audited accounts |
| Sinking fund | Rare | Sometimes | Usually, and disclosed |
The diesel clause, and why it is the biggest trap
The single most expensive misunderstanding in Lagos property is the difference between a service charge that is inclusive of diesel and one that is exclusive of it.
Read this before you sign anything
An inclusive charge covers the fuel to run the generators. Your annual cost is broadly the number you were quoted.
An exclusive charge covers everything except the fuel, which is billed separately by consumption, monthly, at whatever diesel costs that month. On a 3-bedroom unit in a 24-hour building, that separate bill commonly adds ₦1.5M to ₦4M a year on top of the quoted charge.
Two buildings can quote ₦3M and ₦3M. One costs ₦3M. The other costs ₦6M. The listing will not tell you which.
Ask for the wording in the service charge agreement, not a verbal answer from an agent. The phrase to look for is some variant of “exclusive of diesel”, “energy billed separately”, or “power recovered on consumption”. If you see any of those, ask for the last twelve months of actual energy invoices for a comparable unit.
How service charge destroys yield: a worked example
Headline yields quoted by agents are gross: annual rent divided by purchase price. They ignore what ownership costs. Here is the same property, presented both ways.
Ikoyi 3-bedroom, serviced tower
The property did not become a bad investment. But 8.3 percent and 6.0 percent are different assets, and only one of those numbers belongs in a decision. On a ₦420M purchase the gap is ₦9.7M a year.
Who actually pays the service charge
In most Lagos leases the tenant pays the service charge directly, on top of rent. That does not make it free to you as owner. A high service charge suppresses the rent the market will pay, because tenants budget the total. It also lengthens void periods, because the all-in number is what scares tenants off. The example above allocates a portion to the owner to reflect that effect plus vacant-period liability, which falls on the owner in full.
Service charge red flags
These are the signals that a building’s charge is either understated today or heading upward fast.
- No written budget. If management cannot produce a line-item budget, the charge is a number someone invented and it will move.
- No audited accounts. Premium buildings should be able to show what was collected and what was spent last year.
- No sinking fund. Without a reserve, major works get funded by a sudden special levy. Lift replacement in a Lagos tower can run into tens of millions.
- A charge far below the corridor range. Suspiciously cheap usually means the developer is subsidising it during the sales period. It resets once units are sold.
- Diesel excluded and no historic invoices offered. You are being asked to accept an unquantified liability.
- Low occupancy in the building. Fixed costs are divided among paying owners. In a half-empty building, the payers cover the absentees.
- Arrears not disclosed. If a material share of owners are not paying, service levels fall or charges rise for those who do.
- Amenity load out of proportion. A rooftop pool, three lifts and a gym in a twelve-unit building means twelve owners fund all of it.
Questions to ask before you buy
Put these to the facility manager in writing, not to the selling agent. Keep the answers.
- What is the current annual service charge for this exact unit type, and when was it last increased?
- Is the charge inclusive or exclusive of diesel and energy? Show me the clause.
- Can I see the line-item budget for the current year and the audited accounts for the last two?
- How many hours of power are actually delivered per day, averaged over the last six months?
- Is there a sinking fund? How much is in it and what is it earmarked for?
- What is the current occupancy of the building and the collection rate on service charges?
- Have there been special levies in the last three years? What for, and how much per unit?
- Who is the facility manager, how long have they held the contract, and how is their fee calculated?
- What major capital works are anticipated in the next five years?
Worth knowing
A building that answers all nine of these questions cleanly and in writing is usually worth paying a higher service charge for. Transparency in facility management correlates strongly with buildings that hold value on resale. Opacity is the risk, not the number itself.
Frequently asked questions
Is service charge negotiable in Lagos?
Not usually as an individual buyer. The charge is set for the whole building by the facility manager or residents association, and applies per unit type. What you can negotiate is who pays it during any handover or fit-out period, and whether the seller settles outstanding arrears before completion. Both are worth raising.
Does the service charge go up every year?
In practice yes, and in Lagos it has been rising faster than general inflation because diesel and security costs dominate the budget. Assume upward movement when you model returns rather than holding the current figure flat. Buildings that have moved to solar or gas hybrid power have shown more stable charges than pure diesel buildings.
What happens if I refuse to pay?
Most Lagos developments enforce through the residents association and the deed of assignment or estate covenants, which typically permit withdrawal of services, restriction of access to amenities, and legal recovery of arrears. Arrears also become a disclosed encumbrance at resale and will be deducted at completion, so they follow the property rather than disappearing.
Are service charges lower in older buildings?
Sometimes on paper, rarely in reality. Older buildings often have lower stated charges but higher special levies, because ageing plant needs replacing and there is frequently no sinking fund to draw on. Ask specifically about levies in the past three years before assuming an older building is cheaper to hold.
Should I buy a unit with no service charge at all?
Understand what you are taking on. No service charge usually means no shared power, no managed security, no maintained common areas, and no reserve for repairs. For a detached house on its own plot that can be entirely rational, because you control your own costs. In an apartment block it usually means the building is not being maintained, which shows up in resale value.
How does service charge affect what I can charge in rent?
Tenants budget the all-in figure. A building with a ₦6M charge competes for tenants against a building with a ₦3M charge, and the rent gap between them tends to narrow to reflect that. This is why a high charge suppresses achievable rent rather than being neutral to the owner, even when the tenant pays it directly.
Do diaspora owners pay differently?
The charge is the same, but collection and oversight are harder from abroad. Owners overseas should appoint a managing agent who receives the budget, checks it against delivery, and flags special levies before they fall due. Without that, the first you hear of a levy is often a demand with a deadline attached.
Methodology and sources
How these figures were compiled
The ranges on this page are compiled from three inputs:
- BCR corridor research across Ikoyi, Victoria Island, Banana Island, Lekki Phase 1 and Oniru, including service charge figures disclosed during transactions and due diligence.
- Service charge figures published on active listings across Nigerian property marketplaces, which disclose annual charges alongside rent for many serviced units.
- Published reporting on Lagos service charge trends and cost-of-living analysis.
What these figures are not. They are not a quotation, an average, or a guarantee. Service charges are set building by building. A specific unit can fall outside every range on this page for entirely legitimate reasons. Use these figures to know when a number you have been quoted is unusual and worth questioning, not as a substitute for the actual budget of the building you are buying into.
Review cycle. This report is reviewed quarterly. Where a figure has moved materially, the table is updated and the revision date at the top of this page changes.
Corrections. If you manage or own in a building where our range is wrong, we want to know. Better data makes this report more useful to everyone. Contact us and we will review it.
If you are evaluating a specific property, we will pull the actual service charge history, verify what it includes, and model the net yield for you. That is part of every BCR investment brief, and it is free before you commit to anything.
Oluwaseyi Adaralegbe
Oluwaseyi leads BCR’s market intelligence practice across Ikoyi, Victoria Island, Banana Island, Lekki Phase 1 and Oniru. Figures published here are drawn from verified transactions and documented building data, not asking prices.