Service charges drop but London leaseholders still face steep costs

Despite a fall in service charges for leasehold properties across London, charges still remain high.

Data from The Property Institute (TPI), covering 20,000 homes across the capital, reveals a 5.6% drop in charges for buildings over 18 metres since 2025.

Yet across London, average charges have risen by 1.1% over the past two years.

Height and age remain the strongest predictors of service charge costs

According to the data, the average annual service charge for leaseholders living in London’s tallest residential buildings stands at £7,154 in 2026, down 5.6% from £7,578 in 2025, when charges peaked following a 3.9% increase.

Despite this decline, residents in these buildings continue to face some of the highest service charge costs in the country. Across London as a whole, the average annual service charge stands at £4,620 per leaseholder.

The data also reveals that, while service charges in London remain substantially higher than elsewhere in the UK, overall cost growth has been relatively subdued compared with the rest of the country.

According to the TPI, this is primarily driven by a sharp reduction in two key components of service charges.

Buildings insurance costs have fallen by 17% since 2024, compared with a 4% reduction nationally, while communal utility costs have also declined by 17% as energy markets have stabilised following the exceptional volatility of recent years.

The London data further demonstrates that building height and age remain the strongest predictors of service charge costs.

Leaseholders living in buildings over 18 metres pay an average of £7,154 a year, compared with £4,070 for those in buildings under 11 metres. Building age has an equally significant impact, with leaseholders in buildings over 50 years old paying an average of £7,223 annually, compared with £3,328 for those living in buildings less than 25 years old.

Service charges in London remain high

Andrew Bulmer, chief executive officer of TPI, said: “The fact that service charges have remained largely flat across London over the past two years and have fallen in some of the capital’s tallest buildings will be welcome news for leaseholders. After several years of significant rises in service charges, any easing in costs will be felt by residents.”

“However, service charges in London remain high, particularly in older and taller buildings where the cost of maintenance is significantly greater. The latest data shows just how much costs can vary depending on the type of building someone lives in. That is why transparency is so important. Residents should be able to understand what they are paying for, how and why those costs change and how their money is used to maintain their building over the long run.”

“TPI is calling for mandatory reserve funds and a fully regulated profession to give residents the confidence that, when they move into a new home, the building is financially prepared for the future and managed by people who are qualified.”

Mandatory regulation of property managers

The TPI is calling for the mandatory regulation of property managers, given that there are currently no minimum entry requirements despite their responsibility for residents’ safety and the management of millions of pounds’ worth of their most valuable assets.

The TPI argues that effective regulation is essential to promote professional competence, raise industry standards, improve building management and restore confidence in leasehold and commonhold ownership.