If you own a leasehold flat in England or Wales, you’ve probably noticed your service charge creeping up year after year. The average service charge per leaseholder in 2026 is budgeted at £2,880 — and that’s just the middle of the road. For the highest 10% of buildings, that figure jumps to £8,680. I’ve been writing about property costs for a while now, and the single most common question I get is: “How do I know if I’m being charged fairly?” The answer has just become a lot clearer, thanks to a wave of new rules that shift the balance of power toward leaseholders.
These numbers tell a story of widening inequality between buildings. But the bigger story is that you now have more legal tools than ever to challenge what you’re being asked to pay. The Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025 have introduced mandatory formats, strict time limits, and new transparency rules. If you’re a leaseholder, this is the most significant shift in your favour in decades. Here’s what you actually need to know.
Before we dive into the details, it’s worth understanding how these charges fit into the bigger picture of your lease. If you’re negotiating a new lease or renewing an existing one, the same principles apply — and knowing what’s standard can save you thousands. I’ve covered some of this ground before in a guide on securing a fair commercial rent, and the negotiation tactics there translate directly to service charge discussions.
What the New Service Charge Rules Actually Mean for You
The most important thing to understand is that these aren’t minor tweaks. They fundamentally change what a landlord can and cannot do. Before LAFRA 2024, millions of flat owners in England and Wales were receiving large, unexplained bills with very little ability to question them. Managing agents could charge for work with minimal documentation, reserve funds were sometimes poorly handled, and the cost of taking a dispute to tribunal put many leaseholders off pursuing legitimate complaints. The government’s 2025 consultation identified four main problems: a lack of standardised, readable demand formats; inconsistent or delayed annual accounts; limited access to supporting documents and invoices; and high costs when disputes reached tribunal or court.
What I’d do right now is check whether your landlord has issued a demand in the new prescribed format. If they haven’t, that demand may be unenforceable. The format must clearly set out the names and addresses of both the landlord and the leaseholder, the total amount demanded based on the annual service charge budget, the period the demand covers, payment deadlines and consequences for non-payment, and a summary of your rights. The budget must accompany the demand at the start of the service charge year. If any of that is missing, you have grounds to push back.
Why the 18-Month Rule and Insurance Disclosure Matter Most
Of all the changes, two stand out as having the most immediate impact on your wallet. The first is the 18-month rule. Landlords cannot recover costs from leaseholders that were incurred more than 18 months before the demand is issued, unless they first serve a prescribed notice on the leaseholder within that 18-month window. This is a hard deadline. If your landlord tries to bill you for work done two years ago, you can refuse to pay. I’ve seen cases where managing agents have tried to bundle old costs into a new demand, hoping no one notices. That no longer works.
The second is insurance commission disclosure. Under LAFRA 2024, landlords must disclose any commission or payment they receive in connection with building insurance policies. If they fail to disclose this, they cannot recover the insurance premium through the service charge. This is a big deal because insurance costs have been rising sharply — Building Safety Act compliance costs alone grew 53% year on year from 2024. If your landlord is pocketing a commission on that insurance without telling you, the entire premium could be off the table.
Here’s a scenario: you live in a building under 11 metres tall, where the average service charge is £2,418. Your landlord sends a demand that includes a £600 insurance premium. You ask for the commission disclosure. They can’t provide it. Under the new rules, that £600 cannot be recovered through the service charge. That’s a real saving, and it’s yours to claim.
Where Leaseholders Still Get Tripped Up
Even with stronger rights, I see the same mistakes cropping up again and again. Here are the most common ones, and how to avoid them.
Not Asking for the Annual Accounts
For residential buildings containing four or more dwellings, the landlord must provide a written statement of accounts within six months of the end of each service charge accounting year. This statement must include an income and expenditure account, a balance sheet, details of the reserve fund balance, and a summary of any major works carried out. For buildings with four or more properties, a qualified accountant must certify these accounts. If you haven’t received this, ask for it in writing. If they don’t provide it, you can raise a formal complaint and, if necessary, take it to tribunal. The cost of going to tribunal has been reformed too — 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.
Ignoring the Building Height Factor
Building height has a clear impact on costs. Average budgeted service charges are £2,418 for buildings under 11 metres, £3,507 for buildings between 11 and 18 metres, and £4,447 for buildings over 18 metres. If you live in a taller building, your charges will naturally be higher — but that doesn’t mean you should accept them without question. The key is to compare your charges against buildings of similar height and age. Buildings under 25 years old average £2,508, while buildings over 50 years old average £5,208. If your building is 10 years old and you’re paying £4,000, something is off.
Overlooking the Right to Access Documents
Landlords must now provide access to contracts with suppliers and contractors, invoices and receipts for work carried out, insurance policies and any related commission details, fire risk assessments, and historic records going back up to six years. Only genuinely commercially sensitive information can be withheld. If you’re being charged for major works, ask to see the invoices. If the cost seems high, compare it against the market rate. A good understanding of your service charge budget starts with seeing the actual numbers.
→ Scroll right to see all columns
| Building Height | Average Service Charge | Key Cost Driver |
|---|---|---|
| Under 11 metres | £2,418 | Basic maintenance and cleaning |
| 11–18 metres | £3,507 | Building Safety Act compliance |
| Over 18 metres | £4,447 | Fire safety and structural checks |
Not Challenging Administration Charges
Administration charges — fees for providing information or granting consents — must also be reasonable and follow any prescribed limits set by secondary legislation. If your landlord charges you £100 for a copy of your lease, that’s likely unreasonable. Ask for a breakdown of the cost. If they can’t justify it, you can challenge it.
How to Navigate Your Service Charge Like a Pro
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Check Your Demand Format Immediately
The first thing to do is look at your most recent service charge demand. Does it follow the prescribed format? It should clearly state the names and addresses of both you and your landlord, the total amount demanded based on the annual budget, the period it covers, payment deadlines and consequences for non-payment, and a summary of your rights. If any of that is missing, the demand may be unenforceable. Write to your landlord or managing agent pointing out the omission and ask for a compliant demand. If they refuse, you have grounds to withhold payment until they comply. A tenant landlord lawyer can help you draft that letter if you’re unsure.
Request the Annual Accounts and Certification
If your building has four or more dwellings, your landlord must provide a written statement of accounts within six months of the end of each service charge accounting year. This must be certified by a qualified accountant. If you haven’t received it, request it in writing. If they don’t provide it within a reasonable time, you can escalate to the First-tier Tribunal (Property Chamber). The cost of doing so is now much lower because landlords can’t recover tribunal costs through the service charge unless a tribunal orders otherwise.
Scrutinise Insurance Costs and Commission
Ask your landlord for a full breakdown of the building insurance premium and any commission they receive. If they fail to disclose the commission, they cannot recover the premium through the service charge. This is a powerful lever. If you suspect the premium is inflated, compare it against quotes from other providers. A health insurance specialist won’t help here, but a property lawyer can advise on whether the commission disclosure requirement has been met.
Use the 18-Month Rule to Your Advantage
Go through your past demands and check the dates. If any cost was incurred more than 18 months before the demand was issued, and no prescribed notice was served within that window, you can refuse to pay that portion. Keep a record of all correspondence. If the landlord disputes your refusal, you can take it to tribunal. The new rules on litigation costs mean you won’t be unfairly burdened if you’re in the right.
- 1Check the demand formatLook for the prescribed format under LAFRA 2024. If missing, write to your landlord requesting a compliant demand.
- 2Request annual accountsAsk for the written statement of accounts, certified by a qualified accountant, within six months of year-end.
- 3Scrutinise insurance commissionDemand full disclosure of any commission. If not provided, the premium cannot be recovered.
- 4Apply the 18-month ruleCheck dates on past demands. Refuse to pay costs incurred more than 18 months before the demand.
What’s Coming Next: The 2025 Consultation
The government isn’t stopping here. On 4 July 2025, the consultation document “Strengthening Leaseholder Protections over Charges and Services” was published. It’s open until 26 September 2025. Key proposals under consideration include annual reports that outline building condition, planned major works, and key contacts; standardised service charge demand forms and detailed accounts for greater clarity; publication of administration charge schedules for any extra fees; greater transparency on building insurance; easier access to documents; rebalancing litigation costs; reforms to major works planning including mandatory reserve funds; and mandatory qualifications for managing agents. If you want to have a say, now is the time to respond to the consultation.
Frequently Asked Questions
Can my landlord charge me for legal costs if I challenge the service charge? ▾
What happens if my landlord doesn’t provide the annual accounts? ▾
Does the 18-month rule apply to all costs? ▾
What counts as “commercially sensitive” information that can be withheld? ▾
How do I find out if my building’s service charge is reasonable? ▾
Sources and Further Reading
Navigating Tenant Service Charge Year-End Adjustments in the UK — A practical guide to understanding and challenging year-end adjustments to your service charge.
Tips for Understanding Your Landlord Service Charge Budget in the UK — How to read and question the budget your landlord provides at the start of the service charge year.
New Rules for Service Charge Accounting. Cox Hinkins, 2025.
TPI Service Charge Index 2026 Report. The Property Institute, 2026.
Strengthening Leaseholder Protections over Charges and Services. Anchor, 2025.
