Average service charges now exceed £200 a month

Landlords with leasehold flats are now facing average service charge bills above £200 a month for the first time, research reveals.

The findings from Hamptons highlight the fresh pressure to margins and selling prospects of these properties.

The agency says flat leaseholders in England and Wales paid an average £2,405 a year in 2025, or £200.42 a month, a rise of 4.6% on 2024.

That annual figure has climbed 32.6% over five years, up from £1,814 in 2020, and is 55.6% higher than a decade ago.

Over the same periods, CPI increased by 30.9% and 39.8% respectively.

However, in the last year alone, service charges rose 1.2 percentage points faster than CPI, which stood at 3.4%.

Rising compliance costs

The firm’s lead analyst, David Fell, said: “Many leaseholders have seen the economic efficiencies of sharing a single roof with their neighbours steadily eroded by rising running costs.

“Traditionally, the cost of running a flat has been below what owners of houses spend over the long term.

“However, in recent years, large increases in management and compliance costs that aren’t paid by homeowners have upset the equilibrium.”

He added: “While the government is looking to cap ground rents, it is service charges which are usually the single largest cost for leaseholders by some margin.

“But the unplanned nature of building maintenance means that they can’t be capped.”

Service charge by size

Hamptons says that charges vary by size with the average one-bed flat carrying a bill of £2,074 a year, up 3.3% on 2024.

A typical two-bed stands at £2,463, up 4.8%, while three-beds have passed £3,000 annually for the first time, reaching £3,146 after a 5.7% rise.

London remains the most expensive with average service charges now sitting at £2,801 a year, or £233.45 a month, up 6.4% year-on-year.

Over five years they have risen 41.2%, and 64.5% over the decade, reflecting in part the prevalence of taller blocks and higher running costs.

Bigger admin bills

Mr Fell said: “The squeeze on leaseholders’ pockets has been exacerbated by bigger administrative bills, with funds being diverted from direct investment in bricks and mortar.

“The city centre flat boom, which took off in the mid-1990s, means many bigger blocks of flats are now turning 30.

“This can mean that big-ticket items such as roofs, lifts, and windows are approaching the end of their life.”

He added: “So, where there aren’t sufficient sinking funds in place, it’s inevitable that bigger service charge bills will be landing on the doormats and inboxes of leaseholders.”

Charge exceeds 1% of value

Across England and Wales, 37% of flats now have service charges exceeding 1% of their value, up from 29% five years ago.

Some lenders have tightened underwriting criteria to exclude properties where charges routinely exceed that threshold, such as a £4,000 annual bill on a £300,000 flat.

Last year, the average flat had a service charge equal to 0.90% of its value.

However, 14% of flats carried charges above 2% of value, and 6% exceeded 3%.

These were disproportionately city centre homes, where buyers may face a narrower pool of lenders and potentially higher borrowing costs.

Service charges affect sales

Most flat values remain below their 2019 levels, and 19.9% of sellers in England and Wales last year achieved less than they originally paid.

Over the same period, service charges continued to rise.

Saleability is also affected as flats marketed with a service charge at or below 1% of their value were 50% more likely to secure a buyer than those with charges of 2% or more.

Just 14% of flats now come with a service charge of under £100 a month, down from 34% five years ago.

These tend to be low-rise buildings with limited amenities.

Regionally, 30% of flats in the North East still have service charges below £100 a month.

The figure stands at 28% in both the East Midlands and the South West.