According to data by estate agent Hamptons, the average service charge rose by 11% to £192 a month between 2023-24, with the average now sitting above £2,000 in nearly every region of England and Wales for the first time
A huge warning has been issued to flat owners as the average service charge for a leasehold flat in England and Wales has risen to £2,300 a year.
According to data by estate agent Hamptons, the average service charge rose by 11% to £192 a month between 2023-24, with the average now sitting above £2,000 in nearly every region of England and Wales for the first time. This hike dwarfed the 2.5% rate of inflation in the 12 months to December 2024 – the rate at which the cost of goods and services goes up on average.
The average service charge cost for a one-bedroom flat in England and Wales currently sits at £2,007 a year. The average service charge for two-bedroom flats is £2,351, 10.9% higher than the previous year, while three-bedroom flats charge £2,977 – a 7.7% annual rise.
Hamptons says that 2024 marked the biggest annual increase since it began tracking service charge costs in 2016, making service charges the largest bill for many after their mortgages. According to its analysis, 51% were paying more in service charges than their council tax.
Service charges cover the upkeep of common and communal areas such as stairs, gardens, lifts, and entrances, as well as building insurance costs. Properties with more amenities tend to have higher service charges, as buildings with a lift have a cost of 16% or £364 more per year than those without.
Buildings attached to a gym have an average service charge of 24%, or £561, higher, while there is a 39%, or £892, gap between properties with a concierge and without. Hampton says this suggests that higher increases were in areas with more new developments – and more expensive facilities.
Its report said this had created a North/South divide, as more buildings in the Midlands and North of England offered a lift, gym and concierge. This resulted in a 60.9% rise in average service charge costs in the North East over a five-year period to £2,048 – the biggest increase recorded.
This was followed by the North West, with a five-year growth of 57.6% to £2,136, then Yorkshire and the Humber, where annual service charge costs were £2,053, 40.2% higher than in 2019. In contrast, London, the South East, South West and East of England have seen the increase in service charges coincide with inflation, at 27.7% on average.
Only in Wales were average service charges of less than £2,000 per year found, rising 20.8% over five years to an average of £1,767 per year. The annual service charge in London was the highest, at £2,633, representing a 39% increase since 2019.
David Fell, lead analyst at Hamptons, said: “Service charges continue to be pushed up by climbing costs. While rising utility bills initially drove inflation, higher wage and insurance costs followed, resulting in the biggest increase in service charges since our records began. With a high proportion of service charges taken up by labour and building insurance, most leaseholders will have seen their bills continue to rise in recent years.
“While the cost of running a home has risen for pretty much every household over the last five years, some leaseholders have seen costs rise much more quickly. And with limited ways to find savings, the cost of running some facilities, which were affordable five or 10 years ago, could now be breaking the bank.”
“Both buyers and mortgage lenders have become increasingly cautious about committing to high service charge costs, particularly where they perceive charges to be disproportionate to the amenities they get in return. Consequently, there is mounting pressure for leaseholders to have a greater say in how their money is spent. Would-be sellers paying high charges have often seen the value of their homes rise more slowly or even fall. In some cases, sellers are offering potential buyers a cash contribution towards future service charge payments.”
