You are correct that each flat pays its own water bill. There are two elements to the water billing, the standing charge for the pipework and delivery of service and the actually charge for the water. I moved the standing charge element from the individual bills to the service charge account in 2011 to aid the cash flow of the water accountant. The standing charge is around 6k per year for the development. Thus if you look at the budget there is a 41,000 entry for water which is offset against a figure of sales to the tune of 33,000. Thus the actual amount of the water on the service charge is the difference, 8,000. This is slightly more than the actual standing charge due to wanting to be prudent as Thames Water sets their rates in April, which is after our budget is drawn up.
I hope that makes sense. If I haven't explained it clearly enough then do come back to me.
All the best