Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.
Unexpected Service Charge Increases Affect Leaseholders
Two out of five leaseholders say their service charges have risen unexpectedly, according to a new study published in a recent report. The survey, which included 2,000 leaseholders, found that service charges were the cost most frequently identified as having increased unexpectedly, ahead of ground rents.
The report was commissioned by Justice for Property Rights, a coalition of investors, retirees, and freeholders. The group is calling on the Government not to penalise its property interests and claims that proposed leasehold reforms, including reducing ground rents to peppercorn levels, could result in significant financial losses. Justice for Property Rights states that it supports action to address unfair lease terms and efforts to make commonhold a workable alternative, but warns that current proposals could retrospectively affect existing ground rent arrangements without clear compensation.
Proposed legislation would cap ground rents for most existing long leases at £250 a year. The report highlights that leaseholders are concerned about service charges, transparency, accountability, and confidence in building management.
Earlier this year, Hamptons reported that flat service charges have topped £200 a month for the first time. In March, Hamptons revealed that the average service charge paid by flat leaseholders last year was £2,405, representing a 4.6% increase on 2024. The report also noted that more than a third of flats (37%) had a service charge exceeding 1% of their value in 2025, up from 28% a decade ago. According to Hamptons, some mortgage lenders are unwilling to lend above this figure, and flats with a service charge at or below 1% of their value were 50% more likely to sell last year than those with charges of 2% or more.
These findings are relevant for UK letting agents and inventory clerks, as rising service charges and changing leasehold regulations may impact property management, sales, and client advice.
Source: The Negotiator