If you’re a leaseholder or a tenant in a UK residential building, you’ve probably noticed your service charge creeping up year after year. The latest data from the TPI Service Charge Index shows the average service charge per leaseholder in 2026 is now £2,880. That’s a 5.8% increase over two years, and it means the money leaving your account each month is covering a lot more than just cleaning the hallways.
I’ve been following this space for a while now, and what I keep seeing is the same pattern: tenants and leaseholders pay the bill but rarely check whether the numbers stack up. The problem isn’t just that costs are rising — it’s that most people don’t have a reliable way to tell if their building is charging a fair amount compared to similar properties. That’s where benchmarking comes in. It’s the only real tool you have to spot overcharging before it becomes a dispute. Here’s what you actually need to know.
If you’re currently negotiating a lease or reviewing an existing one, understanding how to compare charges is essential. I’ve covered some of the groundwork in a previous piece on service charge negotiation in commercial rentals, but the residential side has its own quirks that are worth digging into separately.
What service charge benchmarking actually means for you
Benchmarking isn’t just a fancy word for comparing prices. It’s the process of measuring your building’s service charge against a reliable dataset of similar properties so you can see whether your costs are reasonable. Without it, you’re essentially signing a blank cheque every year.
The TPI report draws on data from 2,137 residential estates covering more than 117,000 homes, with 95% being leasehold flats. That’s a solid sample size. What it tells us is that the spread is enormous — the lowest 10% of buildings pay around £1,525, while the highest 10% pay £8,680. If you’re in the top bracket, you need to know why. Is it because your building has a concierge, a gym, and a lift? Or is it because your managing agent is charging a percentage-based fee that’s crept up unchecked?
What I’d do first is pull your latest service charge budget and compare it to the averages for your building’s height and age bracket. If you’re in a building under 11m and under 25 years old, you should expect something close to the £2,418 to £2,508 range. If you’re paying double that, it’s time to ask questions. For a deeper look at how to handle disagreements over these figures, my article on tenant service charge arbitration walks through the formal routes available.
Why the new rules make benchmarking more powerful
The government’s 2025 consultation identified four main problems with the old system: unclear demands, late accounts, limited access to invoices, and expensive disputes. The Leasehold and Freehold Reform Act 2024 (LAFRA 2024) was designed to fix all of them, and it changes the game for benchmarking.
Take the new standardised demand format. If your landlord issues a service charge demand that doesn’t follow the prescribed format, that demand may be unenforceable. That’s a powerful lever. It means you can push back on a poorly documented charge and force the landlord to provide the detail you need to benchmark properly.
Then there’s the 18-month rule. Landlords cannot recover costs incurred more than 18 months before the demand is issued, unless they serve a prescribed notice within that window. This stops them from dumping historic costs on you years later. When you’re benchmarking, you want to compare current, forward-looking budgets — not a pile of old invoices the landlord forgot to bill.
One of the biggest changes is around insurance commissions. Under LAFRA 2024, landlords must disclose any commission or payment they receive from building insurance policies. If they don’t, they cannot recover the insurance premium through the service charge. Insurance costs have been a major driver of increases, and this rule gives you a direct way to check whether your building’s insurance is fairly priced.
For buildings with four or more dwellings, the landlord must now provide a written statement of accounts within six months of the end of each service charge year, certified by a qualified accountant. That gives you a standardised document you can use to benchmark year on year. If your building has fewer than four units, you don’t get the same protection, so you’ll need to request the information directly.
I’ve noticed that many leaseholders don’t realise they now have the right to access contracts with suppliers, invoices, fire risk assessments, and historic records going back up to six years. That’s a goldmine for benchmarking. You can compare your building’s cleaning contract cost against market rates, or check whether the lift maintenance fee is in line with what similar buildings pay. If you’re unsure how to use this information effectively, a tenant landlord lawyer can help you interpret the documents and identify where your landlord may be overcharging.
Where people go wrong when benchmarking service charges
Most of the mistakes I see come down to comparing the wrong things or not having the right information in the first place. Here are the most common ones.
Comparing your charge to the wrong building type
The TPI data makes it clear that building height and age are the two biggest cost drivers. A building over 18m averages £4,447, while one under 11m averages £2,418. That’s a difference of over £2,000. If you compare your low-rise block to a high-rise with a concierge and a gym, you’ll think you’re getting a bargain when you might actually be overpaying. Always benchmark against buildings of similar height, age, and amenity level.
Ignoring the impact of reserve funds
Reserve funds saw a 26% year-on-year increase in the TPI report. These are the pots of money set aside for major future works like roof replacements or lift overhauls. Some landlords use them responsibly; others use them to smooth out cash flow. When you benchmark, check whether the reserve fund contribution is reasonable for your building’s age and condition. A building over 50 years old will naturally need a larger reserve than a new build, but the contribution should be justified by a long-term maintenance plan.
Not checking the management fee structure
Under the new RICS Service Charge Standard, management fees may no longer be based on a percentage of the budgeted or actual service charge. Fees should now be fixed at the start of the service charge year. If your managing agent is still charging a percentage, that’s a red flag. A percentage fee incentivises the agent to increase the budget, because their fee goes up with it. A fixed fee removes that conflict of interest. When benchmarking, compare the fixed fee against what similar buildings pay for management — not the percentage rate.
Overlooking non-recoverable costs
The RICS Standard clarifies that certain costs must not be recovered through the service charge. These include landlord investment costs, void property costs, initial capital costs, future redevelopment costs, and negligence-related costs. If your service charge includes items like marketing empty units or feasibility studies for redevelopment, those are likely non-recoverable. Benchmarking your charge against the standard can help you spot these items and challenge them.
Here’s a quick comparison of how different building characteristics affect average service charges, based on the TPI data.
→ Scroll right to see all columns
| Building characteristic | Average service charge | Key insight |
|---|---|---|
| Under 11m height | £2,418 | Low-rise blocks are cheapest to run |
| 11–18m height | £3,507 | Medium-rise adds £1,000+ |
| Over 18m height | £4,447 | High-rise costs nearly double low-rise |
| Under 25 years old | £2,508 | Newer buildings are more efficient |
| 25–50 years old | £2,411 | Slightly lower than new builds |
| Over 50 years old | £5,208 | Older stock costs more than double |
How to benchmark your service charge step by step
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Benchmarking doesn’t have to be complicated. Here’s a practical process you can follow with the information you’re now entitled to receive.
Gather your building’s key data
Start by collecting your latest service charge budget and year-end accounts. Under the new rules, your landlord must provide the budget at least one month before the start of the service charge year, and the year-end accounts within four months of the year-end. The budget should include an apportionment matrix showing how costs are split between occupiers. Write down your building’s height, age, number of units, and any major amenities like lifts, concierge, or gyms. This is your baseline for comparison.
Find comparable buildings in the TPI dataset
The TPI report covers 2,137 estates and 117,000 homes. Use the averages for your building’s height and age bracket as your primary benchmark. If your building is under 11m and under 25 years old, the benchmark is around £2,418 to £2,508. If you’re in a building over 18m and over 50 years old, expect £4,447 to £5,208. If your charge is significantly above these ranges, move to the next step.
Request supporting documents and check for non-recoverable costs
You now have the right to access contracts, invoices, insurance policies, and fire risk assessments going back up to six years. Request these from your landlord or managing agent. Go through the service charge line by line and flag any costs that look like they belong on the non-recoverable list — landlord investment costs, void property costs, initial capital costs, or negligence-related expenses. If you find any, challenge them in writing.
Verify the management fee and insurance commission
Check whether the management fee is fixed or percentage-based. If it’s a percentage, ask the landlord to switch to a fixed fee for the next service charge year. For insurance, ask for a disclosure of any commission the landlord or agent receives. If they refuse to disclose it, they cannot recover the insurance premium through the service charge. This is a strong negotiating position.
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1Collect your service charge budget and accountsYour landlord must provide these within set timeframes. Note your building’s height, age, and amenities.
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2Compare against TPI averages for your building typeUse the height and age brackets from the table above. A significant deviation needs explanation.
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3Request supporting documents and check for non-recoverable costsYou have the right to contracts, invoices, and insurance details. Flag any costs that shouldn’t be there.
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4Verify the management fee and insurance commissionFixed fees are now standard. Insurance commission must be disclosed or the premium is unrecoverable.
What I’d do in your position is keep a simple spreadsheet year on year. Track your building’s total service charge, the management fee, the insurance cost, and the reserve fund contribution. After three years, you’ll have a clear trend line. If costs are rising faster than inflation — which was 6.1% over the same two-year period — you have grounds to ask why. The TPI data shows service charges rose 5.8% over two years, slightly below cumulative inflation, so anything above that needs justification.
For a broader view of how lease structures affect your costs, my guide on permitted use clauses explains how the terms of your lease can limit what you’re charged for.
Frequently asked questions about service charge benchmarking
What if my building has fewer than four dwellings? ▾
Can I challenge a service charge that’s higher than the benchmark? ▾
How often should I benchmark my service charge? ▾
What’s the difference between a service charge budget and a reconciliation? ▾
Do the new RICS rules apply to all residential buildings? ▾
Benchmarking your service charge isn’t about being difficult with your landlord. It’s about making sure you’re paying a fair price for the services you actually receive. The data is now available, the rules are on your side, and the process is straightforward once you know what to look for. Start with your building’s height and age, compare against the TPI averages, and use your new legal rights to dig into the detail.
If this was useful, you might also want to read Save Money on London Commercial Leases: Expert Tips.
Sources and Further Reading
The Rise of Flexible Leases: A Game Changer for UK Businesses and Commercial Landlords — Explores how lease structures are evolving and what that means for your costs.
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.
