## Leasehold Service Charges Exceed £200 a Month

Landlords with leasehold flats in England and Wales are now facing average service charge bills above £200 per month for the first time, according to research by Hamptons. The average annual service charge in 2025 stands at £2,405, representing a 4.6% increase from 2024 and a 32.6% rise over the past five years. This increase outpaces inflation, with service charges rising 1.2 percentage points faster than the Consumer Prices Index (CPI) in the last year alone.

## Rising Costs and Compliance Pressures

David Fell, lead analyst at Hamptons, explains that the traditional economic benefits of sharing building costs among flat owners are being eroded by rising running expenses. He notes, “Large increases in management and compliance costs that aren’t paid by homeowners have upset the equilibrium.” While government efforts focus on capping ground rents, service charges remain uncapped due to the unpredictable nature of building maintenance.

For landlords, this means managing properties with increasing overheads that can affect profitability and tenant affordability. The unpredictable spikes in maintenance costs, such as urgent repairs or compliance upgrades, can lead to higher service charges that are difficult to forecast or control.

## Variation by Flat Size and Region

Service charges vary significantly depending on flat size and location. One-bedroom flats average £2,074 annually, up 3.3% from 2024, while two-bedroom flats have an average charge of £2,463, a 4.8% increase. Three-bedroom flats have surpassed £3,000 per year for the first time, reaching £3,146 after a 5.7% rise.

London remains the most expensive region, with average service charges at £2,801 annually (£233.45 monthly), up 6.4% year-on-year. Over five years, London charges have risen 41.2%, and over the last decade by 64.5%, reflecting the prevalence of taller blocks and higher running costs in the capital.

## Administrative Costs and Ageing Buildings

Mr Fell highlights that administrative expenses have also contributed to rising service charges, diverting funds from direct building investment. Many larger blocks of flats, especially those built during the mid-1990s city centre boom, are now approaching 30 years old. This ageing stock often requires costly repairs to roofs, lifts, and windows.

Without sufficient sinking funds, landlords and leaseholders face larger service charge bills to cover these major maintenance costs. This situation underscores the importance for landlords to ensure adequate reserves are in place to manage long-term building upkeep.

## Service Charges Relative to Property Value

The research shows that 37% of flats in England and Wales now have service charges exceeding 1% of their property value, up from 29% five years ago. Some mortgage lenders have tightened criteria to exclude properties where service charges routinely surpass this threshold, which can limit buyer options and affect marketability.

Last year, the average flat’s service charge equated to 0.90% of its value. However, 14% of flats had charges above 2%, and 6% exceeded 3%, predominantly in city centre locations. Higher service charges relative to value can lead to increased borrowing costs and reduce the attractiveness of leasehold flats to prospective buyers.

## Impact on Sales and Marketability

Most flat values remain below their 2019 levels, with nearly one in five sellers (19.9%) in England and Wales last year achieving less than their original purchase price. Meanwhile, service charges have continued to rise, further squeezing returns.

Flats with service charges at or below 1% of their value were found to be 50% more likely to sell than those with charges of 2% or more. Only 14% of flats now have service charges under £100 per month, down from 34% five years ago. These lower charges tend to be found in low-rise buildings with limited amenities. Regionally, the North East has the highest proportion (30%) of flats with service charges below £100 monthly, followed by the East Midlands and South West at 28%.

For landlords, this data highlights the importance of managing service charges carefully to maintain property appeal and support rental and resale values.

## What This Means for Landlords

Rising service charges present a growing challenge for landlords of leasehold flats. Increased costs can reduce net rental yields and complicate sales, especially in areas with high charges relative to property values. Landlords should monitor service charge trends closely, engage with managing agents to control costs, and ensure sinking funds are adequate to avoid unexpected large bills.

Understanding regional and property size variations can help landlords anticipate charges and advise tenants accordingly. Awareness of lender criteria related to service charge thresholds is also crucial when marketing leasehold flats.

Suggested internal link anchors

– leasehold flats
– service charge bills
– building maintenance costs
– sinking funds
– leaseholder costs
– property value and service charges
– London property market
– flat saleability
– compliance costs
– landlord profitability
– mortgage lending criteria
– administrative expenses

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/