Leaseholders in parts of Britain are facing service charges that are so high their homes may no longer be possible to sell, new data suggests.
Rightmove data crunched by analytics firm, PropertyData, reveals that average service charges in parts of London range between £10,000 and £20,000 a year.
There are almost five million leasehold homes in England alone, according to Government figures.
Many leaseholders, especially those in apartment blocks, will have an annual service charge to pay which goes towards the upkeep of the building and any communal areas.
It commonly covers things like buildings insurance, cleaning, gardening, repairs of communal areas, surveyors’ fees, fire risk assessments and managing agents fees.
For some apartments, it can also include things like a gym, concierge and parking.
There are examples where service charges equate to more than 2.5 per cent of the property’s asking price every year, Property Data found.
Steep: In London, the average annual leasehold service charge is more than £4,000
For example, a two bed property currently for sale in Clerkenwell with an asking price of £775,000 comes with a £28,151 annual service charge. That equates to 3.6 per cent of the asking price.
The flat, which is situated within an Art Deco building comes equipped with a swimming pool, concierge, lift and communal roof terrace.
According to Michael Dent, director at PropertyData, a service charge above 2 per cent becomes a ‘significant disincentive’ if the homeowner wants to sell.
‘Service charges have been rising ahead of inflation in recent years, and we are increasingly seeing some shocking numbers with some examples into six figures per year.’ Dent said.
‘The issue mostly affects flats in blocks built in the last couple of decades, particularly in London. Owners need to be asking whether these high charges reflect value for money.’
But expensive service charges are not exclusive to London. Another such example can be found in Liverpool where a three bedroom penthouse is listed for sale at £750,000.
It comes with an annual service charge of £18,970, equating to 2.5 per cent of the asking price.
The 2,520 square foot apartment is located within a grade one-listed waterfront development and comes with a 24-hour concierge service, lifts and parking space.
And a flat in Ascot being sold for £650,000 commands a service charge of £19,000 per year, 2.9 per cent of the asking price.
While it is not uncommon for some service charges in London to hit the tens of thousands, Property Data also found isolated cases where service charges exceeded £100,000 per year.
One such example, a three bed apartment for sale in Knightsbridge for £7million comes with a £150,000 annual service charge.
The flat comes with a private underground parking for two cars, 24-hour security and a concierge.
Where are service charges highest?
The average service charge in London is currently £4,120 a year based on Rightmove listings analysed by Property Data, or £343.33 a month.
In some pockets of the capital the charges are much higher, however.
For example, in W1S in Mayfair, the average is £19,859. In WC2R, around the Strand it’s £17,369 and in SW1E in Victoria it’s £16,604 a year.
The next most expensive location for service charges is Reading where the average is £2,926 per annum.
It is followed by Wolverhampton where the average service charge is £2,924, Manchester at £2,528 and Bournemouth at £2,515.
Michael Zucker of north London estate agent Jeremy Leaf & Co, says: ‘The market value of flats is often detrimentally affected by high service charges.
‘The service charges may be fair and can relate to communal heating and hot water, 24-hour concierge services, lifts, gyms, large garden areas and even cinemas, but not everyone will make use of all the services on offer and buyers could be put off by this liability.
‘Many period blocks are expensive to maintain and in need of major regular refurbishment, which again can deter would-be purchasers.’
Service charges dragging down property values
Some sellers of flats with outsized service charges are having to cut their losses and sell at a loss.
Figures from estate agent Hamptons show that in 2025 to date, 17.2 per cent of flat sellers have sold for less than they bought for – almost triple the average for all homes.
Flats were always cheaper than houses, but the price gap has widened over the past decade.
In June 2015, the average price of a flat was £161,000, according to Zoopla, compared to roughly £218,000 for a house – a gap of £57,000 or 30 per cent.
A decade later, and the average price of a flat is £191,000 compared to £321,000 for the average house. The gap has increased to £130,000 or 51 per cent.
While there are other factors, service charge could well be playing the biggest role in the poor performance of flats and leasehold homes in general.
‘The main deterrent is the fact that the charges can increase at any time,’ says Babek Ismayil, founder and chief executive of property website OneDome.
In his view, charges are being inflated not only for luxury services like swimming pools, but also basic maintenance.
‘People are prepared to pay a premium for services such as a gym or concierge, but charges for maintenance of communal areas such as stairwells have also become excessive in recent years,’ he adds.
Why are service charges so expensive?
Earlier this year, the estate agent Hamptons that 2024 saw marked the biggest annual increase in average service charges since it began tracking these costs in 2016.
It revealed that more than half of leaseholders now pay more each year on their service charge than they do on council tax.
Service charges are being pushed up by climbing costs across the board, according to buying agent Jonathan Hopper, chief executive of Garrington Property Finders.
‘The high levels of inflation we’ve seen in recent years are to blame for many of the stiff increases in service charges many people are suffering,’ he says.
‘The fees paid to maintenance staff have had to go up sharply, and rapid rises in building material costs will have pushed up the cost of landlords’ buildings insurance.’
This has also pushed up the cost of any modifications that building owners must make to comply with the requirements of the Building Safety Act, introduced in the wake of the cladding scandal.
Part of leaseholders’ annual service charge payments should be paid into a ‘sinking fund’ to cover unexpected one-off costs, but Hopper says they are exceeding even these reserves.
‘Many of these modifications cost more than any contingency provisions can cover, and therefore a lot of these costs are being passed down to leaseholders at sometimes eye-watering and alarming amounts,’ he says.
Others are more skeptical, believing that some managing agents and freeholders are simply overcharging flat owners.
Estate agent Michael Zucker adds: ‘There are cases of managing agents and freeholders exploiting the situation and charging ridiculously high amounts for minor works.
‘It is really a question of whether the services provided offer value for money and a degree of transparency.’
‘There is no value for money’
Liam Spender, 42, a solicitor based in London, bought his leasehold flat near Canary Wharf in 2019 for £590,000.
He says the service charge was less than £4,000 when he moved in and has risen to £5,000 since then.
While the service charge includes buildings insurance, a concierge and swimming pool, Liam says the management of his building is very bad.
He is also concerned about the building’s insurance, which he says increases at a rate of roughly 10 per cent each year and now makes up roughly a quarter of the entire service charge bill.
‘It’s all done incredibly badly,’ says Spender. ‘There is no value for money. The pool isn’t looked after properly. Neither the freeholder nor the managing company care. They don’t respond to emails or phone calls. It’s like having a second job chasing them. When they do try and fix issues, they do it badly.
‘I am one of 436 flats in the block and I am paying roughly £1,250 a year on buildings insurance alone.
‘The management company has disclosed that a third of the cost of that insurance is in fact purely commission for both the freeholder and the broker.’
Liam Spender, 42, has seen his service charge rise by a fifth since 2019
Trying to challenge freeholders or their managing agents over service charges is usually a tall order, according to Spender.
‘Although managing agents have to be part of a redress scheme, these schemes are toothless,’ he says.
‘You can take it a step further by taking it to a tribunal but in my experience tribunals don’t tend to be sympathetic to leaseholders.
‘Freeholders hold the power and unless leaseholders have the time, energy and resources to challenge them, they are effectively powerless.’
On top of the service charge, Liam pays a £350 ground rent to the freeholder, which doubles every 25 years.
Liam says he holds mixed feelings over his decision to buy the flat.
He believes his flat has lost up to £50,000 in value since he bought it based on recent sold prices of similar flats in his building.
‘High service charges are becoming an increasing concern for buyers, making it harder to sell flats like mine,’ he says.
‘To add insult to injury, for most of this year, nobody in my block was able to sell because our fire safety certificate was invalid. That derailed a number of sales.
‘If I could go back to 2019, would I make the same decision again and buy the flat? Probably not.’
How can you reduce your service charge?
Leaseholders should aim to understand exactly what their service charge is going towards and find out what each ‘service’ should really cost.
‘The leasehold agreement should set out exactly what the service charge pays for, as well as how much it can up by,’ says buying agent Jonathan Hopper.
‘There is usually a provision for the annual charge to increase, but under the Landlord and Tenant Act all charges have to be reasonable, typically aligned to inflation.’
If they aren’t happy with their managing agent, leaseholders in the same building can club together and manage their building themselves under a process called Right to Manage.
While they will still need to cope with the rising cost of building maintenance and other services, not paying a managing agent’s fee can reduce the service charge.
Richard Hand, senior legal manager at The Leasehold Advisory Service
‘With many leaseholders experiencing budget constraints, one way they can take more control over service charge costs is by exercising their Right to Manage in qualifying buildings,’ added Richard Hand at The Leasehold Advisory Service.
‘In the building I live in, we have reduced the service charge by 40 per cent and kept it level for the past five years.’
He adds that re-tendering service contracts regularly rather than staying with the same contractor year after year can also help control maintenance costs.
The Leasehold and Freehold Reform Act 2024 should be making things fairer for leaseholders too, according to Hand.
The law has been passed, but is being implemented in stages.
‘The reforms include a ban on insurance commissions paid to landlords and agents, a requirement for landlords to use standardised forms for greater clarity, and to produce financial statements and an annual report,’ he says.
‘It will also provide leaseholders with greater rights to request information about costs and make it easier to challenge. We strongly support the planned Government reforms.’
As for buyers weighing up whether to buy a leasehold property or not, the advice is to proceed with caution.
‘It’s vital that you and your legal advisors study the small print of any leaseholder agreement carefully before you sign, to check whether the service charge includes a provision for the future maintenance costs of the building and if so, to what degree,’ says Hopper.
‘While a solicitor will tell you what the service charges are, you need to probe deeper to get a sense of what scope there might be for big expenses in the future.’
