If you own a leasehold flat or apartment in the UK, the service charge is likely one of your biggest regular housing costs. These charges cover everything from building insurance and lift maintenance to gardening and roof repairs. But how that total bill is split between you and your neighbours — the apportionment — has long been a source of confusion and dispute. New rules driven by the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025 are set to change how these charges are calculated, demanded, and reported. For anyone paying or collecting service charges, the way apportionment works is about to become far more transparent — and far less flexible.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
These changes don’t just tweak the paperwork. They fundamentally alter what landlords and managing agents must provide, how quickly they must provide it, and what happens if they don’t. For leaseholders, the reforms mean you can finally see exactly what you’re paying for and challenge charges that don’t add up. For landlords and agents, the compliance burden is about to get heavier. Here’s what you actually need to know.
One term you’ll see repeatedly in your lease and these new rules is apportionment.
What I tend to notice is that most leaseholders don’t realise their lease already specifies the apportionment method. The new rules don’t change that formula — they just force landlords to show their working. If you’re thinking about buying a leasehold property, checking the apportionment basis before you exchange contracts is worth the effort. A flat with a larger floor area might pay a much higher share than you’d expect.
How service charge apportionment is calculated and what the new rules change
Service charge apportionment isn’t a one-size-fits-all calculation. The method is set out in each individual lease, and it can vary significantly between buildings — even between flats in the same block. The most common approaches include dividing costs equally between all flats, splitting them by floor area, or using a fixed percentage written into the lease decades ago. Some leases use different methods for different types of cost: cleaning might be split equally, while roof repairs are apportioned by floor area.
The new rules don’t rewrite your lease’s apportionment formula. What they do is force landlords to explain it clearly. Under the Landlord and Tenant Act 1985, leaseholders already had some rights to challenge unreasonable charges. The 2024 reforms strengthen those rights by requiring standardised demand formats that must include a breakdown of how each leaseholder’s contribution was calculated. If the demand doesn’t match the lease’s apportionment method, it may be unenforceable.
For buildings with four or more dwellings, the annual accounts must now include a summary of major works and how costs were apportioned. That means you can compare what you paid against what your neighbour paid for the same service. If the numbers don’t line up with the lease, you have grounds to challenge.
Common mistakes in service charge apportionment and how to fix them
Mistaking the apportionment basis in the lease
The most frequent error I see is leaseholders assuming costs are split equally when their lease actually uses a different method. A flat might be responsible for 5% of total costs while a larger unit pays 12%. If the landlord applies an equal split instead, some leaseholders are overpaying. The fix is straightforward: request a copy of your lease and the service charge accounts, then compare the apportionment used against what the lease says. If they don’t match, you can raise a formal query with the managing agent. Under the new rules, landlords must respond to information requests within a set timeframe.
Ignoring the reserve fund apportionment
Many leases require leaseholders to contribute to a reserve fund for major future works. The apportionment for this fund may differ from the day-to-day service charge. Some leases split the reserve fund equally while apportioning running costs by floor area. If you’re only checking the annual service charge demand, you might miss that the reserve fund contribution is calculated differently. The new annual reporting requirements mean reserve fund details must now be included in the statement of accounts, making it easier to spot discrepancies.
Accepting non-compliant demands without question
Under the new rules, a service charge demand that doesn’t follow the prescribed format may be unenforceable. That means you could legally withhold payment until a compliant demand is issued. But many leaseholders simply pay whatever arrives, assuming it’s correct. If the demand lacks the required information — landlord and leaseholder names, total amount, period covered, payment deadlines, and a summary of your rights — you have grounds to challenge. The risk for landlords is that non-compliant demands can lead to tribunal claims and reputational damage.
Overlooking the certification requirement
For buildings with four or more dwellings, the annual accounts must be certified by a qualified accountant. If your building’s accounts haven’t been certified, the landlord may be in breach of the new rules. This isn’t a minor technicality — it’s a core part of the transparency reforms. Leaseholders can request confirmation that the accounts have been properly certified. If they haven’t, that’s another ground for challenging the service charge.
What the new service charge rules mean for landlords, agents, and leaseholders
The reforms touch every stage of the service charge cycle, from how demands are issued to how disputes are resolved. Understanding the full process helps everyone involved avoid costly mistakes.
Standardised demand format and what it must include
From the date the secondary legislation comes into force, every service charge demand must follow a prescribed format. This includes the names and addresses of both landlord and leaseholder, the total amount demanded, the period the charge covers, payment deadlines and consequences of late payment, and a summary of leaseholder rights. Future demand notices must also outline estimated costs, individual leaseholder contributions, the expected timing of formal demands, and valid reasons for any delays. If a demand doesn’t include these elements, it may be unenforceable — meaning leaseholders can withhold payment and seek tribunal intervention.
Annual reporting and accountant certification
For residential buildings with four or more dwellings, landlords must provide a written statement of accounts within six months of the accounting year-end. This statement must include an income and expenditure account, a balance sheet, reserve fund details, and a summary of major works. The accounts must be certified by a qualified accountant where required. Interim demands may be issued six months into the year for remaining estimated costs. Exemptions may apply for fixed service charge payers in retirement schemes or intermediate leases, but these are under consultation.
Enhanced leaseholder rights to information
Leaseholders now have broader access to documents that support the service charge. This includes contracts with suppliers, invoices and receipts, fire risk assessments, insurance policies, and maintenance records. Landlords must respond to requests within a set timeframe. If they don’t, leaseholders can escalate to the tribunal. This is a significant shift — previously, getting sight of these documents often required a formal legal challenge.
Dispute resolution and tribunal reforms
The reforms aim to make it faster and cheaper to challenge unreasonable service charges. The tribunal process has been streamlined, and the costs of bringing a case have been reduced. Leaseholders can now challenge charges without the risk of being hit with the landlord’s legal fees if they lose. This changes the balance of power significantly. Landlords who rely on leaseholders being unwilling to challenge unfair charges may need to rethink their approach.
Upcoming changes to insurance commissions and administration charges
The reforms also address transparency in insurance commissions and administration charges. Landlords and managing agents will need to disclose any commission they receive from insurance policies arranged on behalf of leaseholders. Administration charges for things like late payment or requests for information will also face tighter regulation. These changes are part of the broader push to rebuild trust in the leasehold system.
Frequently asked questions about service charge apportionment
Can my landlord change the apportionment method without my agreement? ▾
What happens if my landlord doesn’t provide the annual accounts within six months? ▾
Does the 18-month rule apply to all service charge costs? ▾
Can I withhold payment if the demand doesn’t follow the new format? ▾
Do the new rules apply to commercial property service charges? ▾
What should I do if I think my service charge apportionment is wrong? ▾
Why getting apportionment right matters more than ever
The Leasehold and Freehold Reform Act 2024 doesn’t just add paperwork — it shifts the balance of power in the landlord-leaseholder relationship. For the first time, leaseholders have a clear statutory right to see exactly how their service charge is calculated, backed by enforceable deadlines and penalties for non-compliance. Landlords and managing agents who treat apportionment as an afterthought risk finding their demands unenforceable and their reputations damaged. For anyone buying a leasehold property, understanding the apportionment method before you commit is no longer optional — it’s essential due diligence.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read Essential Guide to Renting Commercial Spaces in the UK.
Sources and Further Reading
Tips for Securing Your Rent Deposit in the UK — Practical guidance on protecting your deposit, relevant for both residential and commercial tenants navigating new transparency rules.
Cox Hinkins (2025). New Rules for Service Charge Accounting 2026. 🔗
UK Government (2024). Leasehold and Freehold Reform Act 2024. 🔗
UK Government (1985). Landlord and Tenant Act 1985. 🔗
Connaught Law (2024). Leasehold and Freehold Reform Act 2024. 🔗
