Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
Survey Finds Unexpected Service Charge Increases for Leaseholders
A new survey of 2,000 leaseholders has found that 40% have experienced unexpected increases in their service charges. The research, published in a recent report, highlights that service charges were more frequently identified as unexpectedly rising costs than ground rents, raising concerns about the transparency and predictability of leasehold expenses.
Investor Group Calls for Reform Focus
The report was commissioned by Justice for Property Rights, a coalition representing investors, retirees, and freeholders. The group has argued that current leasehold reform proposals could result in losses exceeding £30 billion to property owners. Justice for Property Rights has stated that leaseholders are most concerned about service charges, transparency, accountability, and confidence in building management. The group supports action against unfair lease terms and efforts to make commonhold a workable alternative, but warns that current proposals risk reducing or extinguishing rights without clear compensation commitments.
Service Charge Data Shows Sustained Increases
The findings align with data from Hamptons published earlier this year, which showed that the average service charge paid by flat leaseholders reached £2,405 in 2025, a 4.6% increase on 2024. This marks the first time monthly charges have exceeded £200. Hamptons also reported that 37% of flats had service charges exceeding 1% of their property value in 2025, compared to 28% a decade earlier. According to Hamptons, some mortgage lenders are unwilling to lend on properties above this threshold. 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, suggesting that rising service charges are affecting property marketability and investment decisions.
Market Implications for Letting Agents and Inventory Clerks
The focus on service charges rather than ground rents in leaseholder concerns may influence the direction of future leasehold reform legislation. While government proposals have concentrated on capping and reducing ground rents, the survey suggests that leaseholders prioritise issues around building management costs and transparency. For property investors, letting agents, and buyers, the data indicates that service charge levels are becoming an increasingly important factor in property valuations and saleability, particularly as more flats cross the 1% threshold that triggers lender caution. These findings may prompt greater scrutiny of service charge histories and management arrangements during property transactions.
Source: PropertyWire