Over the past few years, I’ve watched service charge disputes become the single biggest source of frustration for leaseholders I hear from. The Leasehold Advisory Service confirms this pattern — opaque and unaffordable service charges are the most common reason people seek advice. If you’re a tenant or leaseholder in England or Wales, the rules around what you can be charged — and what you can challenge — have just undergone their biggest overhaul in decades. Here’s what you actually need to know.
These reforms, driven by the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025, are meant to fix a broken system. For years, managing agents could charge for work with minimal documentation, reserve funds were poorly handled, and the cost of taking a dispute to tribunal put many off entirely. The new rules change that. If you’re navigating a service charge dispute or just want to make sure you’re not overpaying, understanding your exemptions and rights is the first step. I’ve also covered how service charge arbitration works in the UK if you need a deeper look at the dispute process.
What a Service Charge Exemption Actually Means
The most important thing to understand is that a service charge exemption isn’t a blanket escape from paying. It’s a legal right to challenge or refuse specific costs that don’t meet the new standards. Under LAFRA 2024, if a landlord issues a demand that doesn’t follow the prescribed format — missing your name, the budget breakdown, or a summary of your rights — that demand may be unenforceable. That’s a powerful tool, but only if you know what to look for.
What I’d do in your position: start by checking whether the demand you received includes a budget for the full service charge year. Under the new rules, the budget must accompany the demand at the start of the year. If it doesn’t, you may have grounds to withhold payment until it’s provided. That’s not being difficult — it’s using the law as it was designed. For a broader view of what you might be paying for, take a look at the hidden costs of renting commercial space in the UK — many of the same principles apply.
Why These Changes Matter for Your Wallet
The practical effect of these reforms is that landlords and managing agents now face real consequences for sloppy or unfair billing. Take the 18-month rule: under the Landlord and Tenant Act 1985, landlords already had a time limit, but the new rules tighten it significantly. If a roof repair was done in January 2025, the managing agent must notify you and demand payment before July 2026. If they wait until September 2026 without serving the prescribed notice, they cannot recover those costs through the service charge. That’s a hard deadline, not a suggestion.
Consider this scenario: you live in a block of flats where the managing agent decides to repaint the entire exterior without consulting residents. The work is done in March 2025, but you don’t receive a demand until December 2026 — 21 months later. Under the old system, you might have had to pay and then fight to get the money back. Under the new rules, that demand is invalid unless a prescribed notice was served within 18 months. You can refuse to pay, and the landlord has no automatic right to recover the cost.
What I tend to notice is that most leaseholders don’t realise how much leverage these time limits give them. The government’s own consultation, which ran from July to September 2025, identified that inconsistent or delayed annual accounts were one of the four main problems the new rules aim to fix. If your landlord is late with accounts, you’re not being unreasonable to ask why. If you’re thinking about your broader lease terms, you might also find how to negotiate commercial rent in the UK useful — the same negotiation principles often apply to service charges.
Where People Go Wrong With Service Charge Exemptions
The most common mistake I see is leaseholders assuming that because a charge appears on a statement, it must be legitimate. That’s exactly what the old system relied on. Here are the specific errors that cost people real money.
Assuming a Demand Is Valid Just Because It Arrived
Under LAFRA 2024, a service charge demand must follow a prescribed format. It must include your name and address, the landlord’s name and address, the total amount based on the annual budget, the period covered, payment deadlines, and a summary of your rights. If any of these are missing, the demand may be unenforceable. I’ve seen demands that were little more than a single line on an invoice — those are now legally questionable. If you receive one, don’t pay it automatically. Ask for the prescribed format demand first.
Ignoring the Insurance Commission Disclosure Rule
Landlords must now 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 deal because insurance commissions have historically been a hidden profit centre for managing agents. If your service charge includes building insurance and you haven’t seen a disclosure of commissions, you may have grounds to challenge that portion of the charge. A tenant landlord lawyer can help you determine whether the non-disclosure makes the charge unenforceable in your specific case.
Paying Tribunal Costs Without Question
Historically, landlords could recover their legal costs from tribunal disputes through the service charge. That presumption has been scrapped. Under the new rules, landlords cannot recover tribunal or court costs through the service charge unless a tribunal specifically orders otherwise. If you’re in a dispute and your landlord threatens to pass legal costs onto you, they can’t — unless they get a specific order. This removes a major barrier to challenging poor practice. If you’re already in a dispute, understanding essential tips for renting commercial space in the UK might give you additional context on what’s reasonable to expect from a landlord.
Not Requesting Supporting Documents
Landlords must now provide access to contracts with suppliers, invoices and receipts, insurance policies and commission details, fire risk assessments, and historic records going back up to six years. Only genuinely commercially sensitive information can be withheld. If you suspect you’re being overcharged, request these documents. If the landlord refuses without a valid reason, that refusal itself may be a breach of the new rules. What I’d do: send a written request by email and keep a copy. If they don’t respond within a reasonable time, you have documented evidence for a tribunal.
→ Scroll right to see all columns
| Requirement | Old Rules | New Rules (LAFRA 2024) |
|---|---|---|
| Demand format | No prescribed format | Prescribed format required; unenforceable if missing |
| Annual accounts deadline | No fixed deadline | Within 6 months of year-end |
| Cost recovery time limit | 18 months (loosely enforced) | 18 months, strictly enforced with prescribed notice |
| Insurance commission disclosure | Not required | Mandatory; non-disclosure blocks premium recovery |
| Tribunal cost recovery | Presumed allowed | Only if tribunal specifically orders |
How to Protect Yourself and Challenge Unfair Charges
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The new rules give you real leverage, but only if you use them correctly. Here’s a practical guide to what you should do, step by step.
Check Your Demand Against the Prescribed Format
When you receive a service charge demand, compare it against the requirements under LAFRA 2024. Does it include your name and address? The landlord’s name and address? The total amount based on the annual budget? The period covered? Payment deadlines? A summary of your rights? If any element is missing, write to the landlord or managing agent and ask for a compliant demand. Do not pay the non-compliant demand until they provide one. If they refuse, you have grounds to challenge the charge at tribunal. A property lawyer can review the demand and advise whether it meets the legal standard.
Request Your Annual Accounts on Time
For buildings with 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. For buildings with four or more properties, a qualified accountant must certify these accounts. If your landlord is late, send a written reminder. If they still don’t comply, you can apply to a tribunal for an order requiring them to produce the accounts.
Use the 18-Month Rule as a Shield
Keep a record of when work is done in your building. If you receive a demand for costs incurred more than 18 months ago, check whether the landlord served a prescribed notice within that 18-month window. If they didn’t, the cost is irrecoverable. This is particularly useful for major works like roof repairs or external painting, which can run into thousands of pounds. A business lawyer can help you assess whether the notice was properly served.
Request Insurance Commission Disclosure
Write to your landlord or managing agent and ask for a full disclosure of any commission or payment they receive from the building’s insurance policy. If they fail to provide it, they cannot recover the insurance premium through the service charge. This is a straightforward request that puts the burden on them. If they refuse, you have a clear basis to challenge that portion of the charge. A health insurance specialist won’t help here — but a property solicitor will. Make sure you’re asking the right professional.
Document Everything for Tribunal
If your dispute escalates to tribunal, the quality of your documentation will determine the outcome. Keep copies of every demand, every letter you send, every response you receive, and a log of dates. Under the new rules, landlords cannot recover their tribunal costs through the service charge unless a tribunal specifically orders otherwise. That means the financial risk of going to tribunal has shifted in your favour. If you’re organised and your case is strong, the landlord has less incentive to drag things out.
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? ▾
Does the 18-month rule apply to all service charge costs? ▾
Can my landlord pass their legal fees from a tribunal dispute onto me? ▾
What documents am I entitled to request from my landlord? ▾
Do these rules apply in Scotland or Northern Ireland? ▾
Your Next Move
The new service charge rules give you more protection than ever before, but they only work if you use them. Start by checking your most recent demand against the prescribed format. If something’s missing, ask for a compliant version. If your landlord is late with accounts, request them in writing. If you’re facing a charge for work done more than 18 months ago, check whether a prescribed notice was served. These are small actions that can save you thousands. If this was useful, you might also want to read the hidden costs of commercial renting in the UK — are you prepared?
Sources and Further Reading
Essential floor plan tips for renting commercial space in the UK — Practical advice on what to look for in a lease before you sign, including service charge considerations.
New rules for service charge accounting. Cox Hinkins, 2025.
Strengthening leaseholder protections over charges and services consultation. UK Government, 2025.
TPI Service Charge Index 2026 Report. The Property Institute, 2026.
