If you’re a leaseholder or tenant in the UK, you’ve probably received a service charge invoice that felt a bit like a riddle wrapped in a spreadsheet. You’re not alone. According to the TPI Service Charge Index 2026, the average service charge per leaseholder now sits at £2,880. That’s a significant chunk of change, and it’s been rising at roughly the same pace as inflation over the last two years. I’ve been writing about property costs for a while now, and the single most common question I get is simple: “How do I know if I’m being charged fairly?” The answer has changed dramatically in the last year. New rules under the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025 have completely overhauled how landlords must present, justify, and collect these charges. If you don’t know what’s changed, you could end up paying for costs you shouldn’t be on the hook for. Here’s what you actually need to know.
Understanding your invoice starts with knowing what the law now requires your landlord to show you. If you’re looking for a broader overview of how these charges fit into your lease, you might find our guide on service charge agreements in the UK a helpful starting point. For those who want to dig into the numbers themselves, a good calculator or spreadsheet tool can help you track what you’re being billed against what was budgeted.
What the New Rules Mean for Your Service Charge Invoice
The core idea here is transparency. For years, leaseholders had very little visibility into how charges were calculated. The government’s 2025 consultation identified four main problems: a lack of standardised demand formats, inconsistent annual accounts, limited access to supporting documents, and high dispute costs. The new rules tackle each one directly. A service charge is simply the payment you make to cover the cost of maintaining and managing shared areas — things like cleaning communal hallways, lift maintenance, gardening, roof repairs, and building insurance. What’s changed is how that payment is presented and justified.
Why These Changes Matter for Your Wallet
The practical impact of these reforms is that you now have real leverage when you receive an invoice that doesn’t add up. 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 have tightened this further. If your landlord sends you a bill for a roof repair that happened two years ago and they never warned you about it, you may not have to pay. That’s not a loophole — it’s a protection.
Consider a scenario where you live in a building over 18 metres tall. The TPI data shows that average budgeted service charges for buildings over 18m are £4,447, compared to £2,418 for buildings under 11m. That’s a difference of over £2,000 a year, largely driven by Building Safety Act compliance costs, which saw a 53% year-on-year increase. If your landlord hasn’t provided a clear breakdown of these safety costs, you now have the right to ask for the invoices and contracts. I’ve seen too many cases where leaseholders just paid the bill because they didn’t know they could challenge it. My first move would always be to request the supporting documents before paying anything that looks unusual. If you’re dealing with a particularly complex dispute, speaking with a tenant landlord lawyer can clarify your specific rights under your lease.
Where People Get Tripped Up on Service Charge Invoices
Even with the new rules in place, I see the same mistakes cropping up again and again. Here are the most common ones, and how to avoid them.
Paying a Non-Compliant Demand Without Question
Under LAFRA 2024, if a landlord issues a demand that doesn’t follow the prescribed format, that demand may be unenforceable. That means if your invoice is missing the landlord’s name and address, the payment deadline, or a summary of your rights, you may not legally have to pay it. Most people just pay anyway because they don’t want to cause trouble. But the law is on your side here. If you receive a demand that looks incomplete, ask for a compliant one in writing. Don’t ignore it entirely — that could lead to other problems — but don’t assume it’s valid just because it arrived in the post.
Missing the 18-Month Deadline on Old Costs
This is the one that catches most people off guard. If your landlord tries to charge you for a cost that was incurred more than 18 months ago, and they didn’t serve you a notice within that period, you can challenge it. The key is knowing when the cost was actually incurred, not when the invoice was raised. If you’re unsure, request the original invoice from the contractor. Landlords must now provide access to invoices and receipts for work carried out. If they can’t produce one, that’s a red flag.
Not Checking What’s Being Charged for Insurance
Under the new rules, landlords must disclose any commission or payment they receive in connection with building insurance policies. If they fail to disclose it, they cannot recover the insurance premium through the service charge. This is a big deal because insurance costs have been a major driver of service charge increases. Ask your landlord for a breakdown of the insurance premium and any commission they’re receiving. If they refuse, that’s a potential breach of the rules.
Assuming All Costs Are Recoverable
The updated RICS Service Charge Code 2025 makes it clear that certain costs cannot be recovered through the service charge. These include landlord investment costs like asset management and rent collection, void property costs like rates and insurance for empty units, initial capital costs like original fit-out or new equipment, future redevelopment costs, and costs arising from negligence or poor maintenance. If your invoice includes any of these, you should challenge it. A tenant service charge reconciliation guide can help you spot these items more easily.
→ Scroll right to see all columns
| Cost Type | Recoverable? | Example |
|---|---|---|
| Building insurance | Yes (with commission disclosure) | Premium for block policy |
| Landlord investment costs | No | Asset management, rent collection |
| Void property costs | No | Rates and insurance for empty units |
| Initial capital costs | No | Original fit-out, new plant installation |
| Negligence-related costs | No | Costs from avoidable overspending |
How to Review and Challenge Your Service Charge Invoice
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Here’s a practical, step-by-step approach to reviewing your invoice and taking action if something doesn’t look right.
Check the Format and Completeness
Start by verifying that the demand meets the new prescribed format. It should clearly show the names and addresses of both you and your landlord, the total amount demanded, the period it covers, payment deadlines and consequences for non-payment, and a summary of your rights. If any of these are missing, write to your landlord and ask for a compliant demand. Keep a copy of your request. If they don’t respond within a reasonable time, the demand may be unenforceable. A property lawyer can help you draft that letter if you’re unsure about the wording.
Request the Annual Budget and Accounts
Your landlord must provide a written statement of accounts within six months of the end of each service charge accounting year. This 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 dwellings, a qualified accountant must certify these accounts. If you haven’t received these, request them in writing. Compare the actual spending against the budget you were given at the start of the year. Large discrepancies need an explanation.
Scrutinise Major Cost Categories
Pay particular attention to the categories that have seen the biggest increases. Building Safety Act compliance costs rose 53% year-on-year, and reserve fund contributions increased 26%. Ask for the specific invoices and contracts behind these figures. For insurance, request the policy document and a disclosure of any commission your landlord receives. If they fail to disclose commission, they cannot recover the premium through the service charge. For management fees, note that under the new RICS standard, fees can no longer be based on a percentage of the budgeted or actual service charge — they must be fixed at the start of the year.
Challenge Non-Recoverable Costs
If you spot any of the non-recoverable costs listed in the table above — landlord investment costs, void property costs, initial capital costs, future redevelopment costs, or negligence-related costs — raise it with your landlord immediately. Put your challenge in writing and reference the relevant section of the RICS Service Charge Code 2025. If the landlord refuses to remove the charge, you can take the dispute to a tribunal. Under the new rules, landlords cannot recover tribunal or court costs through the service charge unless a tribunal specifically orders otherwise, which removes a major barrier to challenging unfair charges.
- 1Verify the demand formatCheck that the invoice includes all required elements: landlord and leaseholder details, total amount, period covered, payment deadlines, and rights summary. If anything is missing, request a compliant version in writing.
- 2Request supporting documentsAsk for the annual budget, certified accounts, invoices for major works, insurance policy details, and any commission disclosures. Landlords must respond promptly under the new rules.
- 3Identify non-recoverable costsCross-check each line item against the list of costs that cannot be recovered through the service charge, including landlord investment costs, void costs, and capital improvements.
- 4Challenge in writingPut your challenge in writing, referencing the specific rule or standard that supports your position. If the landlord refuses, consider tribunal — you no longer have to worry about paying their legal costs if you lose.
Frequently Asked Questions
Can my landlord charge me for a new lift installation through the service charge? ▾
What happens if my landlord doesn’t provide the annual accounts within six months? ▾
Can I be charged for empty units in my building? ▾
What if my service charge demand doesn’t include a summary of my rights? ▾
How far back can I request historic service charge records? ▾
The new rules have shifted the balance of power significantly in favour of leaseholders and tenants. Your invoice is no longer a take-it-or-leave-it document. It must follow a prescribed format, be backed by a budget and certified accounts, and exclude a long list of costs that landlords used to slip through. My advice is simple: treat every service charge invoice as a starting point, not a final bill. Request the supporting documents, check the format, and challenge anything that doesn’t look right. If this was useful, you might also want to read Renting vs Buying: The Ultimate UK Commercial Property Showdown.
Sources and Further Reading
Tenant Service Charge Reconciliation Guide — A practical walkthrough of how reconciliation works and what to look for when comparing budgeted costs against actual spending.
Essential Guide to Service Charge Agreements — Covers the basics of what your lease should say about service charges and how to negotiate better terms before signing.
New Rules for Service Charge Accounting. Cox Hinkins, 2025.
TPI Service Charge Index 2026 Report. The Property Institute, 2026.
The New RICS Service Charge Standard: What It Is and Changes for 2026. Stevens & Bolton, 2025.
