Average service charge for flat in England and Wales hit £2,300 last year

The average annual service charge for a leasehold flat in England and Wales has jumped by an inflation-busting 11% to £2,300, according to data.

The increase – the biggest for at least eight years – means that for many their service charge is their largest household bill after their mortgage, and may fuel fresh calls for the government to accelerate an overhaul of the scandal-hit leasehold sector.

Average service charges are now above £2,000 in every region of England for the first time, said the estate agent Hamptons, which compiles an index that calculates the average annual bill for the 5.4 million leaseholders of flats in England and Wales.

The service charge paid by flat owners usually includes maintenance and repairs, building insurance and management costs.

Amid scandals and controversy over “unfair” and opaque charges, issues with cladding, damp and mould, and a feeling of powerlessness among many leaseholders, the government has pledged “sweeping” changes. It has promised leaseholders more powers and protections, though some already-announced measures have been delayed.

Hamptons said that after a 4.3% rise in 2023, the typical service charge increased by 11% last year to £2,300 a year, or £192 a month.

That is more than four times the 2.5% increase in the consumer price index (CPI) during the same period.

Over both the short and medium term, service charges have been rising faster than inflation. Overall, between 2019 and 2024, the average annual service charge rose by 33.9%: from £1,717 to £2,300.

However, this disguises wide variations between regions and types of property. Hamptons said a “north-south divide” had opened up. The average service charge in the north-east and north-west England had risen by 60.9% and 57.6% respectively over the period, compared with 27.7% increase for the four regions of southern England.

This divide is linked to the higher number of new city centre developments in the north of England and the Midlands that offer facilities such as a lift, gym and concierge facilities, said a Hamptons spokesperson.

In addition to floor area, service charges usually reflect the age of the building and the facilities on offer. “Larger, amenity-rich developments have generally seen service charges rise much faster than smaller developments with fewer facilities,” said Hamptons.

Last year’s average service charge increase was the biggest annual rise since the firm began its index in 2016.

Hamptons’ analysis showed 51% of leaseholders were paying more in service charges than they were in council tax.

David Fell, the lead analyst at the firm, said would-be sellers of leasehold flats who were paying high charges had often seen the value of their homes rise more slowly or even fall. “In some cases, sellers are offering potential buyers a cash contribution towards future service charge payments,” he added.

The Leasehold and Freehold Reform Act 2024, which became law shortly before the general election, introduced some changes to the sector. Labour has committed itself to ending the “feudal” leasehold system before the end of this parliament.