Apportionment methods explained: fixed shares, floor area, weighted splits — how to choose and document

If you manage property costs, service charges, or shared business overheads, you already know the uncomfortable truth: it is rarely the total bill that causes friction. It is the split.

Apportionment is simply the method you use to divide a cost fairly between multiple people, units, or parts of a business. Done well, it keeps things transparent, defensible, and easy to explain. Done badly, it can trigger disputes, slow down year-end sign-off, and create problems when someone asks for evidence.

That matters even more when money is tight. In the English Housing Survey leasehold fact sheet, leaseholders who paid a service charge reported an average (mean) annual service charge of £1,720 (median £1,375), with higher averages for flats and for London. When charges feel material, people look harder at how you have calculated their share.

This guide walks you through the 3 most common apportionment approaches you will see in the UK property world (and plenty of business scenarios too): fixed shares, floor area, and weighted splits. You will also learn how to choose between them, how to document them properly, and how to avoid the classic mistakes that create questions later.

If you want a wider grounding in service charge processes, these 2 pages are useful context:

What “apportionment” really means in practice

Apportionment is the rule (or formula) that decides who pays what. You will use it in situations like:

  • Residential blocks: splitting cleaning, lift maintenance, fire safety, insurance, managing agent fees, and repairs.
  • Commercial sites: allocating security, common area maintenance, utilities, and management costs across multiple tenants.
  • Mixed-use buildings: separating residential and commercial cost categories, then splitting within each category.
  • Management companies (RMC and RTM): preparing year-end statements and showing how each unit’s charge has been calculated.
  • Landlords and property owners: splitting costs between personal and business use, or separating repairs from improvements for tax purposes 

At a basic level, you are aiming for 3 things:

  1. Fairness: people pay in proportion to benefit received (or as set out in the lease).
  2. Consistency: the same logic applies year to year unless there is a clearly documented reason to change.
  3. Evidence: you can show how you arrived at the percentages or £ figures.

Method 1: Fixed shares (equal split or fixed percentages)

Fixed shares are exactly what they sound like. You split costs using a pre-agreed set of percentages, or you simply divide equally.

Examples:

  • 10 flats each pay 10 percent of the shared costs.
  • Unit 1 pays 18 percent, Unit 2 pays 22 percent, Unit 3 pays 60 percent, because that is what the lease says.
  • Each tenant pays £100 per month as a fixed service charge, with reconciliation later.

When fixed shares work well

Fixed shares are usually best when:

  • Units are very similar in size and use (for example, a small block of near-identical flats).
  • Your lease or transfer document sets percentages that you must follow.
  • The costs are broadly “everyone benefits equally” items (for example, a shared alarm monitoring contract where every unit benefits similarly).

Fixed shares also keep administration simple. You do not need regular re-measurement. You can set up invoicing quickly. It is easier to explain in plain English.

Where fixed shares can go wrong

They become harder to defend when units are clearly not comparable. If 1 unit is double the size, or has much heavier footfall, an equal split can feel unfair.

Fixed shares can also become outdated if:

  • a unit is subdivided,
  • new space is created,
  • use changes significantly (for example, storage becomes a food unit with higher waste and cleaning requirements).

How to document fixed shares properly

Your file should include:

  • The source document (lease clause, schedule, transfer, or RTM agreement).
  • The schedule of percentages (even if it is “10 units at 10 percent each”).
  • A clear note on what the fixed shares apply to (all costs, or only certain categories).
  • How you handle rounding (because small rounding differences can add up over 12 months).

Tip: add a short explanation in the year-end pack so leaseholders can see the logic without hunting for it. If you prepare year-end statements, this is a key part of clarity.

Method 2: Floor area apportionment (split by size)

Floor area apportionment splits costs based on the size of each unit. In principle, it is simple: bigger space, bigger share.

You will see this most often in commercial property and mixed-use settings, but it is also used in some residential developments.

Why floor area is popular

  • It usually feels intuitively fair.
  • It scales naturally (if a unit is larger, it generally benefits more from shared services).
  • It can be applied consistently across a whole site.

Industry guidance and templates often include floor-area based schedules. For commercial property service charges, RICS materials include example apportionment schedules using weighted floor areas and related approaches.

The big practical question: which “area” are you using?

This is where people get caught out. “Floor area” can mean different things:

  • Net internal area (often used for commercial).
  • Gross internal area.
  • Saleable area.
  • Residential internal area measured differently across developments.

If you are not specific, you can end up with arguments that are not really about the maths, but about the measurement basis.

When floor area is the right choice

Floor area works well when:

  • Costs relate to the building as a whole (maintenance, insurance, management fees).
  • The benefit generally scales with size.
  • You have reliable, consistent area data for every unit (ideally from the same source).

When floor area is not the best fit

Some costs are not driven by size. For example:

  • Waste removal may be driven by usage type rather than size.
  • Security may be driven by footfall, trading hours, or access points.
  • Heating for common areas might not track unit size in any meaningful way.

In those cases, a pure floor area split can feel unfair, even if it is easy.

How to document floor area apportionment

You want a short, audit-ready chain of evidence:

  • Source of areas (leases, measured survey, as-built drawings, agent schedule).
  • Date of the schedule (and version number).
  • A clear definition of the area basis used.
  • Any exclusions (for example, do you include storage, plant rooms, balconies).
  • The calculation itself: total area, each unit area, resulting percentage.

Even if you never have a formal audit, good documentation reduces time spent answering questions.

If you want a team to help you make your accounting and schedules easier to defend, this is exactly the type of work that sits alongside service charge support and commercial management accounting.

Method 3: Weighted splits (floor area plus “fairness adjustments”)

Weighted splits are a step up in sophistication. You still often start with floor area, but then you apply weightings to reflect reality.

A weighting might reflect:

  • higher usage,
  • higher cost-to-serve,
  • higher benefit,
  • different service levels.

For example:

  • a ground-floor retail unit in a shopping parade might have higher waste and cleaning demands than an office upstairs,
  • a unit with a dedicated entrance might not benefit from certain common areas,
  • a tenant with longer opening hours might drive more security and cleaning.

RICS guidance for commercial property service charges includes examples that use weighted floor areas for apportionment schedules.

When weighted splits are a good choice

Weighted splits can be the best option when:

  • The site is mixed-use (different unit types).
  • Some tenants receive a different level of service.
  • A simple area split would create obvious unfairness.
  • You need something defensible if challenged.

What makes weighted splits risky

The risk is not the idea, it is the judgement.

If weightings are:

  • not clearly explained,
  • not consistently applied,
  • not backed by evidence, they can look arbitrary.

That is when disputes start.

How to build a weighted split that you can defend

Keep it simple and make your reasoning visible:

  1. Start with a base metric (often area).
  2. Define the weighting factor (for example, retail units weighted at 1.2, offices at 1.0).
  3. Explain why that factor exists (for example, retail generates higher cleaning and waste costs).
  4. Apply it consistently across the categories it relates to.

Do not weight everything. Weight the costs that genuinely need it. You might have:

  • a standard area split for insurance and management fees,
  • a weighted split for cleaning, security, waste, and marketing.

How to choose the right apportionment method

If you are deciding from scratch (or reviewing what you inherited), work through these questions.

1) What do the governing documents require?

In property, the lease or transfer is the starting point. If it sets out percentages or a method, you generally follow that. If it allows discretion, you still need a method that is “reasonable” and consistent with the agreement and industry expectations.

If you are aligning your approach with professional standards, this is a helpful read: RICS and ARMA Best Practices for Service Charge Accounts.

2) What best matches the “benefit received” principle?

Ask yourself: what actually drives the cost?

  • Building insurance often aligns well with floor area or fixed lease percentages.
  • Cleaning and waste may align better with usage.
  • Lift maintenance might reasonably exclude ground floor units if they do not benefit (depending on the lease and building layout).

3) Do you have the data to support it?

A great method on paper is a bad method if you cannot evidence it.

  • Floor area: do you have reliable measurements?
  • Weighted splits: do you have a documented rationale and a consistent schedule?
  • Consumption-based splits: do you have sub-metering and accurate readings?

4) Can you explain it to a non-accountant in 30 seconds?

This is an underrated test. If you cannot explain the split simply, you will struggle when questions arrive.

5) Will it still work next year?

Choose a method that is stable enough to carry forward. If changes are likely (new unit, redevelopment, tenancy changes), build a process for updating.

Documenting apportionment: what good looks like

If you want fewer back-and-forth questions at year end, your documentation should be as clear as your calculations.

A strong apportionment pack usually includes:

  • Apportionment schedule (unit list, basis, area if used, weighting if used, final percentage).
  • Definitions (what “area” means, what the weighting reflects).
  • Source documents (leases, surveys, measurement schedule).
  • Change log (what changed since last year and why).
  • Notes by cost category (if different bases are used for different services).
  • Rounding policy (so totals always reconcile to 100 percent).

If you produce annual accounts and supporting schedules across property or business structures, this sits neatly alongside annual statutory accounts and related work and an outsourced finance function where you want everything organised and repeatable.

Worked examples

Example 1: fixed share (simple block)

You have 6 similar flats. Annual shared costs are £18,000.

Fixed shares: each flat pays 1/6.

  • Each flat’s annual share: £18,000 ÷ 6 = £3,000
  • Monthly demand: £3,000 ÷ 12 = £250

Simple, consistent, easy to understand.

Example 2: floor area (different unit sizes)

3 commercial units share £24,000 of site costs.

  • Unit A: 1,000 sq ft
  • Unit B: 2,000 sq ft
  • Unit C: 3,000 sq ft
  • Total: 6,000 sq ft

Percentages:

  • A: 1,000 ÷ 6,000 = 16.67 percent
  • B: 2,000 ÷ 6,000 = 33.33 percent
  • C: 3,000 ÷ 6,000 = 50.00 percent

Annual charges:

  • A: £4,000
  • B: £8,000
  • C: £12,000

Example 3: weighted split (retail vs office)

Same areas as above, but Unit A and B are retail with heavier cleaning and waste requirements. You apply a weighting of 1.2 to retail and 1.0 to office.

Weighted areas:

  • A: 1,000 × 1.2 = 1,200
  • B: 2,000 × 1.2 = 2,400
  • C: 3,000 × 1.0 = 3,000
  • Total weighted: 6,600

Percentages:

  • A: 1,200 ÷ 6,600 = 18.18 percent
  • B: 2,400 ÷ 6,600 = 36.36 percent
  • C: 3,000 ÷ 6,600 = 45.45 percent

You would normally apply this weighting only to the cleaning and waste categories, not necessarily to insurance or management fees.

Don’t forget tax apportionment (it trips people up)

Apportionment is not only about service charges. It also appears in property tax and landlord accounting.

A common example is where a single invoice includes both repairs and improvements. You cannot simply claim the whole lot as a deductible expense. You need a fair split so that only the repair element is treated as revenue expenditure, and the improvement element is treated appropriately. FHP Accounting covers this principle in its guidance on repairs vs improvements and apportionment.

HMRC also discusses apportionment in property income contexts, including how apportionments of receipts and outgoings can apply between vendor and purchaser in a property sale contract.

If you want support that ties together practical bookkeeping and HMRC-friendly records, these pages may help:

Common apportionment mistakes (and how to avoid them)

  1. Using a method that conflicts with the lease Fix: check the governing clause first, then build your schedule around it.
  2. Not defining the basis (area type, exclusions, weightings) Fix: write short definitions in the schedule itself.
  3. Applying weightings without explaining why Fix: add a short rationale for each weighting and apply it only where relevant.
  4. Leaving old area data in place after alterations Fix: add an annual “review areas” step to your year-end checklist.
  5. Inconsistent treatment across cost categories Fix: clearly label which basis applies to which cost headings.
  6. Rounding errors that stop the schedule hitting 100 percent Fix: have a rounding policy and reconcile the total every time.

FAQs

What is the simplest apportionment method to use?

Fixed shares are the simplest because you do not need measurement data. They work best where units are broadly similar or where the lease already sets the percentages. The key is to keep the schedule clear and consistent year to year.

Is floor area always the fairest method?

Not always. Floor area is often a good proxy for benefit, but some costs are driven by usage rather than size. Cleaning, waste, and security frequently need a different approach, especially in mixed-use buildings.

What is a weighted service charge split?

It is an approach where you start with an objective base (often floor area) and then apply weightings to reflect different levels of benefit or demand on services. RICS material for commercial property service charges includes examples using weighted floor areas in apportionment schedules. 

How often should you review apportionment percentages?

At least annually, even if only to confirm nothing has changed. You should also review whenever there is a major change: new units, altered floor areas, a change in services, or a material change in use.

What should you include in an apportionment schedule?

Unit list, basis of apportionment, area data if used (with source and definitions), weightings if used (with reasons), resulting percentages, and a version date. Add a change log if anything has been updated since the previous year.

What if a leaseholder or tenant challenges the split?

Your best defence is documentation: the lease position, a transparent schedule, and a clear explanation of why the method is reasonable. For residential disputes, applications to the First-tier Tribunal (Property Chamber) are part of the formal route for resolving issues.

Can you change the apportionment basis mid-year?

Sometimes, but it needs careful handling. If a unit changes size or is created mid-year, you may need a time-based apportionment for that period, and you should document the effective date and the calculation approach.

How FHP Accounting can help you get this right

If you want apportionment that is clear, consistent, and easy to evidence, it helps to have the right accounting support around you. FHP Accounting works with commercial property managers, RMC and RTM companies, landlords, and growing businesses to keep your schedules, statements, and year-end packs tidy and defensible.

Ready to take the hassle out of your finances? Speak to FHP Accounting today — your trusted accountants nottingham for clear advice and fast, friendly support. Whether you need reliable accountant payroll services, specialist help from property tax accountants, seamless xero bookkeeping services, or a dedicated accountant for landlords, our team is here to help you stay compliant, save money, and grow with confidence. Get in touch now to book your consultation.