As many as 40% of UK leaseholders have been caught off guard by unexpected hikes in their service charges, a stark reminder that transparency and predictability are still major issues within the leasehold system. According to a recent survey of over 2,000 leaseholders, this financial burden is now a more pressing concern than rising ground rents.
The report, commissioned by Justice for Property Rights – a coalition representing investors, retirees, and freeholders – highlights that while proposed reforms have largely focused on ground rents, the everyday impact on leaseholders often stems from service charge fluctuations. Richard Merrin, a spokesperson for the group, noted that leaseholders frequently identify service charges, transparency, accountability, and confidence in building management as their top monthly concerns.
Data published by Hamptons earlier this year showed that the average service charge for flat leaseholders reached £2,405 in 2025, a 4.6% increase on the previous year and the first time monthly charges surpassed £200. Moreover, 37% of flats had service charges exceeding 1% of their property value in 2025 – a significant rise from 28% a decade ago.
The growing significance of service charges as a financial burden is also affecting the property market. Hamptons data revealed that flats with service charges at or below 1% of their value were 50% more likely to sell than those with charges of 2% or more, highlighting how this factor influences investor decisions and buyer interest.
For first-time buyers, escalating service charges can add another layer of complexity and cost to an already challenging market, potentially impacting affordability even if the initial purchase price seems manageable. The implications for existing homeowners and landlords are also significant, with unexpected service charge hikes eroding disposable income or profit margins – particularly for those relying on rental income.