If you live in a leasehold flat in the UK, your annual service charge is probably one of your biggest regular housing costs. According to the TPI Service Charge Index 2026, the average bill now sits at £2,880 per leaseholder. That figure alone tells you why this topic keeps coming up in conversations I have with readers — it’s a significant chunk of money, and many people aren’t sure what they’re actually paying for or whether they’re being charged fairly.
I’ve been covering property costs and leaseholder rights for years, and one pattern I see repeatedly is confusion around what service charges should and shouldn’t include. The rules have changed substantially, especially with the Leasehold and Freehold Reform Act 2024 and the updated RICS Service Charge Code 2025. These reforms are the biggest shake-up in decades, and they affect everything from how demands are formatted to what costs can be recovered. Here’s what you actually need to know.
Understanding your service charge isn’t just about knowing the number on your bill. It’s about knowing what you’re entitled to challenge, what your landlord must provide, and where the new rules give you more protection. If you’re dealing with a dispute or just want to get ahead of rising costs, speaking with a tenant landlord lawyer can help clarify your specific situation — especially now that the legal landscape has shifted so significantly.
What a service charge actually covers — and what it doesn’t
The most important thing to understand is that a service charge isn’t a blank cheque for your landlord. It’s meant to cover the actual costs of running and maintaining the building you live in. That typically includes things like cleaning common areas, lighting hallways, maintaining lifts, gardening, building insurance, and contributions to a reserve fund for future major works. But the new rules have drawn much clearer lines around what cannot be recovered through the service charge.
Under the updated RICS Service Charge Standard, which came into force on 31 December 2025, several categories of cost are explicitly non-recoverable. These include the landlord’s investment costs — things like asset management, rent collection, and any work that enhances the landlord’s reversionary interest. Also excluded are void property costs (rates, insurance, and services for empty units), initial capital costs like original fit-out or new plant installation, future redevelopment feasibility studies, and any costs arising from the landlord’s own negligence. If your managing agent tries to pass these on, you have grounds to challenge them. My first move would always be to check the lease first — the RICS Standard cannot override what’s written in your lease, but it sets a professional benchmark that agents and landlords are expected to follow.
Why the new rules matter for your wallet
The reforms aren’t just administrative tweaks. They have real financial consequences for leaseholders. Take the 18-month rule, for example. Under the Landlord and Tenant Act 1985, landlords cannot recover costs incurred more than 18 months before the demand is issued, unless they serve a prescribed notice within that window. The new rules tighten this further, meaning if your landlord drags their feet on billing you for work done two years ago, you may not have to pay. That’s a significant protection, especially given that Building Safety Act compliance costs jumped 53% year-on-year — the kind of expense that could easily be backdated if landlords weren’t held to strict deadlines.
Consider a scenario where you live in a building over 18m tall. Your service charge averages £4,447, and a chunk of that is now going toward fire safety remediation and compliance. If your landlord tries to bill you for work completed 20 months ago without proper notice, the new rules give you a clear basis to refuse. That’s not being difficult — that’s exercising a right Parliament intended you to have.
What I tend to notice is that leaseholders often don’t realise how much leverage these time limits give them. Landlords and agents are under pressure to get their paperwork right, and a demand that doesn’t follow the prescribed format under LAFRA 2024 may be unenforceable. If you’re unsure whether a charge is valid, a property lawyer can review the demand and tell you where you stand.
Where leaseholders get caught out
Even with stronger protections, people still make mistakes that cost them money. Here are the most common ones I see, backed by what the data and new rules tell us.
Not checking the format of the service charge demand
Under LAFRA 2024, service charge demands must follow a prescribed format. They need to include the names and addresses of both landlord and leaseholder, the total amount demanded based on the annual budget, the period covered, payment deadlines and consequences for non-payment, and a summary of your rights. If your demand doesn’t meet these requirements, it may be unenforceable. Yet many leaseholders simply pay without checking. The fix is straightforward: compare your demand against the statutory requirements. If something’s missing, write to your landlord and ask for a compliant demand before paying.
Ignoring the annual statement deadline
For buildings with four or more dwellings, the landlord must provide a written statement of accounts within six months of the end of the service charge accounting year. This must include an income and expenditure account, a balance sheet, reserve fund details, and a summary of major works. A qualified accountant must certify these accounts. If your landlord is late, they’re in breach. You can request the statement and, if they don’t provide it, challenge any charges that should have been documented within that timeframe.
Overlooking insurance commission disclosure
Under LAFRA 2024, landlords must disclose any commission or payment they receive from building insurance policies. If they fail to do so, they cannot recover the insurance premium through the service charge. This is a big one — insurance costs have been rising, and undisclosed commissions have been a hidden drain on leaseholders for years. If your service charge includes insurance, ask for written confirmation of any commission. If they won’t provide it, you may have grounds to withhold that portion of the charge.
Assuming all major works are automatically recoverable
Just because work has been done doesn’t mean you have to pay for it through the service charge. The RICS Standard clarifies that initial capital costs, improvement works beyond repair or replacement, and costs arising from the landlord’s negligence are non-recoverable. If your building has had new windows installed that go beyond like-for-like replacement, or if the work was necessary because the landlord failed to maintain something properly, those costs shouldn’t be on your bill. Check the lease and the RICS guidance before paying.
I’d add one more observation here: the landlord dispute process has also changed. Landlords can no longer recover tribunal or court costs through the service charge unless a tribunal specifically orders otherwise. That removes a major deterrent to challenging unfair charges. If you’ve been overpaying, the path to redress is clearer than it used to be.
→ Scroll right to see all columns
| Building height | Average service charge | Key cost driver |
|---|---|---|
| Under 11m | £2,418 | Standard maintenance |
| 11–18m | £3,507 | Fire safety compliance |
| Over 18m | £4,447 | Building Safety Act costs |
How to manage your service charge effectively
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The new rules give you more tools than ever to keep your service charge under control. Here’s how to use them.
Review your demand against the statutory checklist
Every time you receive a service charge demand, run through the LAFRA 2024 requirements. Does it name both parties? Does it state the total amount, the period, and the payment deadline? Does it include a summary of your rights? If any element is missing, the demand may be unenforceable. Write to your landlord in writing, citing the specific requirement they’ve missed, and ask for a compliant demand. Don’t pay until you get one. This alone can resolve many disputes before they escalate.
Request your annual accounts on time
You’re entitled to a written statement of accounts within six months of the end of the service charge year. If you haven’t received it, request it formally. The statement must include an income and expenditure account, a balance sheet, reserve fund details, and a summary of major works. For buildings with four or more dwellings, a qualified accountant must certify these accounts. If the accounts are late or incomplete, that’s a breach you can raise with your landlord or, if necessary, at tribunal.
Check insurance commission and reserve fund contributions
Ask your landlord or managing agent for written disclosure of any insurance commission they receive. Under LAFRA 2024, failure to disclose means they can’t recover the premium through the service charge. Also check the reserve fund balance — the TPI report shows reserve fund contributions grew 26% year-on-year, so you want to know where that money is and how it’s being used. The RICS Standard requires that any monies held for service charges yet to be incurred must be held in discrete or virtual accounts, with interest credited to the service charge after bank charges and tax.
Challenge non-recoverable costs
If you see charges for landlord investment costs, void property costs, initial capital improvements, future redevelopment studies, or negligence-related expenses, challenge them. The RICS Standard is clear that these cannot be recovered through the service charge. Write to your landlord with specific reference to the Standard and your lease. If they push back, consider understanding your lease commencement date and other lease terms — the more you know about your contractual rights, the stronger your position.
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1Check the demand formatCompare your service charge demand against the LAFRA 2024 prescribed format. If anything is missing, request a compliant demand before paying.
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2Request annual accountsIf you haven’t received a certified statement of accounts within six months of year-end, request it in writing. Late accounts are a breach.
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3Ask about insurance commissionRequest written disclosure of any commission your landlord receives on building insurance. If they refuse, the premium may not be recoverable.
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4Challenge non-recoverable costsIdentify any charges that fall under the RICS Standard’s non-recoverable categories and challenge them in writing with reference to the Standard.
Frequently asked questions
Can I refuse to pay a service charge demand that doesn’t follow the new format? ▾
What happens if my landlord doesn’t provide annual accounts within six months? ▾
Are service charges capped by law? ▾
Can my landlord charge me for empty flats in the building? ▾
What should I do if I think I’ve been overcharged for years? ▾
Sources and Further Reading
Is your UK business paying too much rent? — A practical guide to benchmarking commercial rent, useful if you’re comparing property costs across your portfolio.
The future of UK retail: reimagining commercial spaces — Explores how changing property use affects service charge structures in mixed-use buildings.
TPI Service Charge Index 2026 Report. The Property Institute, 2026.
New Rules for Service Charge Accounting. Cox Hinkins, 2025.
The New RICS Service Charge Standard: What It Is and Changes for 2026. Stevens & Bolton, 2026.
