What is a leasehold service charge?
If you own a leasehold property, you’ll know all about the joy of service charges. These are fees leaseholders – also known as “tenants” – pay to management companies, housing associations, or local authorities that take care of the communal areas of their buildings. They typically cover the cost of cleaning, repairs, insurance, gardening, and major works like roof repairs or lift replacements. The specific services covered and the calculation method should be detailed in your lease agreement.
Why are my service charges so high?
Service charges can be high due to various factors, including extensive maintenance work, high insurance premiums, or management fees.
According to a report by Hamptons, average service charges rose by 11 per cent in 2024, far outpacing inflation, with flat owners now paying an average of £2,300 a year.
If your charges seem excessive, it’s worth taking a deeper look at exactly what you’re paying for.
The Hidden Cost of Cover: Insurance Commissions
In many leases, the management company has responsibility for arranging building cover, with some inflating the cost and quietly skimming off a cut for themselves as a “commission”. This is rarely disclosed to tenants, as in the case of the Canary Riverside development. In 2024, a tribunal found that residents of the 325 flats had been overcharged by more than a million pounds for their building insurance over a ten-year period. Two years earlier, a Financial Conduct Authority report had found that in 39 per cent of the cases they examined, insurance brokers had passed on half of their own commission to freeholders or managing agents.
Mispriced Maintenance: When Landlords Ignore the Lease
In other cases, leaseholders have been overcharged for maintenance work in breach of their leases. At Painter House in Shadwell, London, residents discovered they were being charged 1/24th of service costs, despite their leases stating they should pay only 1/38th. The First-tier Tribunal ruled in the leaseholders’ favour, finding the charges had been incorrectly calculated by Tower Hamlets Community Housing.
After Grenfell: Do I Have to Pay for Cladding Removal?
Following the 2017 Grenfell Tower fire which killed 72 people, many buildings were found to have unsafe cladding. In one such case, residents of the Northpoint block in Bromley were horrified to discover their block was wrapped in combustible material. To add insult to injury, FirstPort, their managing agent, informed them they had to foot the bill – estimated at £4 million – to take it down. Some faced bills of up to £70,000.
Not to be beaten, the residents mounted a campaign in 2019, supported by MPs and national media. As a result of the pressure, the government agreed to fund the cladding removal through the Building Safety Fund, saving leaseholders from catastrophic personal costs.
Can I challenge my service charges?
- Yes. Leaseholders can challenge service charges they believe are unreasonable.
- Under Section 21 of the Landlord and Tenant Act 1985, you can:
- Request a written summary of your service charges for the past 12 months.
- Your landlord is legally required to respond within one month.
- If the issue can’t be resolved informally, you can apply to the First-tier Tribunal (Property Chamber) for a formal decision on whether the charges are reasonable.
- The odds of a decision in your favour are good: according to a 2023 report by the Social Housing Action Campaign (SHAC), over two-thirds of service charge challenges were either fully or partially upheld.
- For early advice and support, the Leasehold Advisory Service (LEASE) provides free, government-funded legal advice to leaseholders, park homeowners, and landlords in England and Wales.
What happens if I don’t pay my service charges?
Non-payment of service charges can lead to legal action by the freeholder. This may include court proceedings and, in extreme cases, forfeiture of your lease. It’s crucial to address disputes promptly and seek legal advice before matters escalate.
How Lewis Nedas Can Help
We provide expert legal support to leaseholders dealing with service charge disputes, including:
- Reviewing lease terms to identify unfair or unclear clauses
- Assessing charges to determine if they are reasonable and legally compliant
- Negotiating with landlords or managing agents on your behalf
- Representing clients at the First-tier Tribunal in complex or high-value cases
- Offering strategic, practical advice whether you’re facing a sudden bill or an ongoing dispute
Why choose us?
Lewis Nedas is a leading, multi-award-winning law firm with a reputation for excellence across property, litigation, criminal defence, and regulatory law. With over 40 years of experience, we provide practical, strategic legal advice tailored to each client’s individual needs.
Our team includes nationally recognised experts, and we’ve been consistently ranked in the Legal 500 and featured in The Times Best Law Firms for our outstanding client service and legal expertise.
Whether you’re navigating a complex leasehold dispute or seeking advice on property, fraud, or business matters, we combine deep legal knowledge with a commitment to achieving results.
Fees
We are committed to providing clear and transparent information about our legal fees. We do not operate on a ‘no win, no fee’ basis, but instead offer tailored fees that reflect the complexity and requirements of each case.
Our fee structure comprises our competitive hourly rates, and in certain cases, we may be able to seek litigation funding. Fees are discussed and agreed with clients at the outset to ensure clarity and avoid unexpected costs.
Contact our expert Property Team in London
📞 Call us on 020 4572 1413 or complete our online enquiry form.