The average annual service charge for a leasehold flat in England and Wales has risen by 11%, reaching £2,300 in 2024. This marks the most significant increase in at least eight years. The surge in service charges has made it the largest household bill for many, second only to mortgage payments. These increases have been fueled by a rise in new city centre developments, particularly in the north of England and the Midlands.
The north-east and north-west of England have experienced sharp rises in service charges, with increases of 60.9% and 57.6% respectively over the period. Meanwhile, southern England has seen a 27.7% rise. For the first time, the average service charge has surpassed £2,000 in every region of England. Between 2019 and 2024, the average annual service charge rose by 33.9%, climbing from £1,717 to £2,300.
These developments often include amenities such as lifts, gyms, and concierge services, contributing to the higher costs. Hamptons reported that "larger, amenity-rich developments have generally seen service charges rise much faster than smaller developments with fewer facilities." The disparity between regions has highlighted a growing "north-south divide," with the north experiencing faster rises than the south.
The sharp increase in service charges coincides with political movements towards reforming the leasehold system. Labour has pledged to end what it describes as the "feudal" leasehold system before the current parliament concludes. Additionally, the Leasehold and Freehold Reform Act 2024 introduced several changes aimed at addressing these issues.
The trend of rising service charges has also influenced the real estate market. David Fell noted, "In some cases, sellers are offering potential buyers a cash contribution towards future service charge payments," indicating an attempt to mitigate concerns over these escalating costs.