Over the past few years, I’ve watched the rules around tenant service charges shift more than in any other period I can remember covering this area. The changes aren’t minor tweaks — they represent the biggest overhaul of service charge regulation in decades, driven by the Leasehold and Freehold Reform Act 2024 (LAFRA 2024) and the updated RICS Service Charge Code 2025. If you’re a leaseholder or a tenant in a commercial property, the way your landlord asks for money and accounts for it has fundamentally changed.
These aren’t abstract figures. The 18-month rule, for example, means that if your landlord tries to bill you for a repair that happened two years ago, you can push back. The four-month accounts deadline gives you a clear window to check what you’re being charged. And the £7,000 fine shows the government is serious about enforcement. Here’s what you actually need to know.
I’ve spent years following how property costs land on tenants, and the pattern is consistent: the rules exist, but knowing how to use them is what makes the difference. If you’re dealing with a dispute over what you owe, it’s worth understanding how tenant indemnity clauses work in commercial leases — they often interact with service charge obligations in ways people don’t expect. And if you’re unsure whether a charge is valid, speaking to a tenant landlord lawyer can clarify your position before you pay something you shouldn’t.
What a Service Charge Actually Covers — and What It Doesn’t
The first thing to understand is that a service charge isn’t a blank cheque for the landlord. It’s a payment for specific things: maintaining shared areas, building insurance, lift maintenance, gardening, cleaning communal spaces, and the management fees charged by the managing agent. But the key word is “reasonable.” Under the Landlord and Tenant Act 1985, costs must be reasonably incurred and the work must be of a reasonable standard. That’s not just a suggestion — it’s the legal test a tribunal will apply if you challenge a charge.
What I tend to notice is that people assume the lease defines everything, and it does set the framework. But the new rules under LAFRA 2024 and the RICS Code now override certain lease terms — for example, if your lease says the landlord can recover tribunal costs through the service charge, that’s no longer allowed unless a tribunal specifically orders it. That’s a big shift. If you’re negotiating a new lease or reviewing an existing one, understanding how anchor lease terms affect service charge apportionment can save you from paying more than your fair share.
Why These Changes Matter for Your Wallet
The practical effect of these reforms is that landlords can no longer bury questionable costs in a vague annual statement. Take the new requirement for a prescribed format on service charge demands. If your landlord sends you a demand that doesn’t include the budget, your rights, and the payment deadline, that demand may be unenforceable. That’s not a technicality — it’s a protection you can use.
Consider a scenario where your landlord bills you £3,000 for roof repairs that were carried out 20 months ago. Under the tightened 18-month rule, that demand is invalid unless they served a prescribed notice within the 18-month window. You don’t have to pay it. The same logic applies to insurance commissions: if your landlord doesn’t disclose the commission they’re pocketing from the building insurance policy, they can’t recover the premium through the service charge at all. That’s a direct financial hit for them, not you.
There’s also a demographic angle worth noting. These rules apply differently depending on where you are. The Renters’ Rights Act 2025 and the associated Information Sheet requirements apply to England. If you’re in Scotland or Wales, the framework is different. My advice: check which jurisdiction your property falls under before assuming a rule applies. And if you’re a commercial tenant, the RICS Commercial Code 2nd Edition (effective 31 December 2025) introduces mandatory budget timescales — budgets must be issued at least one month before the service charge year starts. That gives you time to question costs before they’re locked in. For a deeper look at how commercial rent traps catch small businesses, that article covers the service charge pitfalls that often accompany rent negotiations.
Where People Go Wrong With Service Charges
I’ve seen the same mistakes come up again and again. Here are the most common ones, and how to avoid them.
Paying a Demand That Doesn’t Meet the New Format
Under LAFRA 2024, a service charge demand must include the names and addresses of both landlord and leaseholder, the total amount based on the annual budget, the period it covers, payment deadlines and consequences, and a summary of your rights. If any of that is missing, the demand may be unenforceable. Yet many tenants pay without checking. What I’d do: compare every demand against that checklist before paying. If something’s missing, write to the landlord and ask for a compliant demand. You’re not being difficult — you’re enforcing the law.
Ignoring the 18-Month Rule
This is the one that catches most people. A landlord cannot recover costs incurred more than 18 months before the demand is issued, unless they served a prescribed notice within that window. The mistake tenants make is assuming the landlord’s timeline is correct. It often isn’t. If you receive a demand for work done two years ago, check the date. If it’s outside the 18-month window, you can challenge it. The table below shows how the key time limits stack up across different requirements.
→ Scroll right to see all columns
| Requirement | Time Limit | What Happens If Missed |
|---|---|---|
| Cost recovery demand | 18 months from when cost incurred | Landlord loses right to recover cost |
| Annual accounts (4+ dwellings) | 6 months after year-end | Breach of statutory duty; possible tribunal action |
| Annual accounts (RICS Code) | 4 months after year-end | RICS disciplinary action for members |
| Budget issuance (Commercial Code) | 1 month before service charge year starts | Non-compliance with professional standard |
Not Asking for Supporting Documents
Under the new rules, landlords must 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. Many tenants never ask. That’s a mistake. If you’re being charged for a £10,000 lift repair, you’re entitled to see the invoice. If the landlord refuses, that’s grounds for a tribunal challenge. A tenant landlord lawyer can help you draft a formal request if the landlord is uncooperative.
Assuming the Lease Overrides the Law
Some leases contain clauses that seem to give the landlord broad powers — for example, to recover tribunal costs or to charge administration fees without limit. Under LAFRA 2024, those clauses are overridden where they conflict with the new rules. Tribunal costs cannot be recovered through the service charge unless a tribunal orders it. Administration charges must be reasonable and follow any prescribed limits. Don’t assume your lease is the final word. The law now sets a floor that the lease cannot go below.
If you’re a commercial tenant, the RICS Commercial Code 2nd Edition also requires that service charge funds be held in a separate or virtual account — they cannot be mixed with the landlord’s general funds. Any interest earned must be credited back to the service charge account. If you suspect your landlord is pooling funds, you can request evidence of the separate account. For more on how location and lease terms drive commercial rent prices, that article covers the service charge factors that often get overlooked in rent negotiations.
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How to Protect Yourself: A Practical Guide
Knowing the rules is one thing. Using them is another. Here’s what I’d do if I were a leaseholder or tenant right now.
Check Every Demand Against the Prescribed Format
When you receive a service charge demand, pull up the LAFRA 2024 requirements and go through them line by line. Does it include the landlord’s name and address? Yours? The total amount based on the annual budget? The period it covers? Payment deadlines? A summary of your rights? If any item is missing, write to the landlord within 14 days and ask for a compliant demand. Do not pay until you receive one. If the landlord refuses, you have grounds to challenge the demand at a tribunal. The process: send a formal letter (keep a copy), wait 21 days for a response, then file a claim with the First-tier Tribunal (Property Chamber) if needed. The tribunal can declare the demand unenforceable.
Request and Review the Annual Accounts
For buildings with four or more dwellings, the landlord must provide a written statement of accounts within six months of the year-end, certified by a qualified accountant. Request this document as soon as it’s due. Look for: an income and expenditure account, a balance sheet, the reserve fund balance, and a summary of major works. If the accounts are late or uncertified, that’s a breach. You can ask the tribunal to order compliance. For commercial properties under the RICS Code, the deadline is four months — even tighter. If you’re in a commercial lease, check whether your lease incorporates the RICS Code; many do by reference.
Scrutinise 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. Ask your landlord for a written disclosure of all commissions. If they refuse or give a vague answer, you can challenge the insurance charge in its entirety. This is one of the most underused protections. A tenant landlord lawyer can advise on whether the disclosure you’ve received meets the legal standard.
Understand the Future Ban on Insurance Commissions
LAFRA 2024 proposes a future ban on insurance commissions being part of service charges altogether. This hasn’t taken effect yet, but it’s coming. What this means for you now: if your landlord is currently charging a commission, they must disclose it. Once the ban is in force, they won’t be able to charge it at all. Keep an eye on the implementation timeline — the government is expected to set a date in secondary legislation. When it happens, your service charge should drop by the amount of the commission. If it doesn’t, challenge it.
Keep Records Going Back Six Years
Under the new rules, you have the right to access historic records going back up to six years. That’s a powerful tool. If you suspect you’ve been overcharged in previous years, you can request invoices, receipts, and contracts from that period. The landlord must provide them. If they refuse, you can apply to the tribunal for an order. My advice: request the records for the past six years now, even if you don’t suspect a problem. It gives you a baseline and puts the landlord on notice that you’re paying attention. For a full commercial property rental checklist, that guide includes service charge review steps you can use before signing a lease.
Frequently Asked Questions
Can my landlord charge me for tribunal costs through the service charge? ▾
What happens if my landlord doesn’t give me the Renters’ Rights Act Information Sheet by 31 May 2026? ▾
Do the new service charge rules apply to commercial properties? ▾
Can I challenge a service charge demand that’s more than 18 months old? ▾
What should I do if my landlord refuses to show me invoices for work charged to the service charge? ▾
Does the RICS Service Charge Code apply to my building if my managing agent isn’t a RICS member? ▾
The bottom line is this: the rules have shifted in your favour, but only if you use them. My single piece of advice is to start with the 18-month rule. Check the date on every demand you receive. If it’s outside that window, you have a clear legal basis to refuse payment. That one check will save you more money than any other action you can take. If this was useful, you might also want to read top considerations when renting an office in the UK.
Sources and Further Reading
Tips for renting a manufacturing facility lease in the UK — Covers service charge considerations specific to industrial and manufacturing properties, including utility apportionment and maintenance obligations.
New rules for service charge accounting. Cox Hinkins, 2025.
The Renters’ Rights Act Information Sheet 2026. Ministry of Housing, Communities and Local Government, 2026.
RICS Service Charge Code explained. Real Estate Agents London, 2025.
