Service charges

This content applies to England only.

Housing laws vary between England and Scotland. This page applies to England only. Get advice relating to Scotland

Most leaseholders have to pay a service charges to cover the cost of maintaining the building they live in. This section explains what you can do if you don't agree with your service charges and what happens if you don't pay them.

You can get more detailed advice about your situation from the Leasehold Advisory Service or a solicitor in your area. Use the Community Legal Service Directory to find one.

What are service charges for?

Service charges cover your share of the cost of maintaining the building you live in. Most leaseholders living in blocks of flats have to pay them because it is the only manageable way to share the costs of looking after the building. It is less common for leaseholders of converted houses to have service charges. They are normally paid annually but can sometimes be paid quarterly or half-yearly.

Service charges usually cover things like repairs, cleaning and shared amenities such as porters and communal gardens. They sometimes cover buildings insurance as well but you may pay this separately. You normally have to pay a share of everything even if you don't use some of the services. For example, even if you live on the ground floor and never use the lift, you will probably still have to pay something towards its maintenance.

How much do I have to pay?

If you are not sure what your service charges cover, check your lease. It should say clearly:

• what services you have to pay for and when
• how your freeholder can collect the charges
• how service charges are calculated
• how they are divided between you and any other leaseholders
• whether there is a sinking or reserve fund

Most leases have a section that covers general services not specifically mentioned in the lease (a 'sweeping-up clause'). If your lease doesn't have this type of clause, you don't have to pay for anything that isn't specifically mentioned in the lease.

The amount you pay can vary from one year to the next ('variable service charges'). If you bought your home through the 'right to buy', you can't be charged more than the estimate of service charges you were given when you bought your home (plus inflation) for the first five years.

If your lease doesn't give enough information about service charges or what it says isn't fair (for example, if it means your freeholder makes a profit), get advice. You may be able to get a court order to change it.

What is a sinking or reserve fund?

Many leaseholders have to pay towards the costs of major repairs that may be needed in future into a 'sinking fund' or a 'reserve fund' on top of their regular service charges. This is often a precaution to pay for things like replacing a roof or repairing a lift if there is an emergency. You normally have to pay over a period of years. If you sell your home before the money has been spent on repairs, you are unlikely to get it back.

You only have to pay into a sinking or reserve fund if your lease says you have to. If you want to set one up, get advice. You will need a formal agreement with the freeholder and all the other leaseholders.

Can I be charged for things that I didn't agree to?

Your freeholder has to consult you if s/he is going to carry out expensive work. This usually includes:

• any work that will cost more than £250 per flat, or
• any services (such as gardening or cleaning) that will cost more than £100 per flat

The freeholder has to give you copies of at least two estimates for the work and at least one of them has to be from someone who isn't connected to the freeholder. You have the right to comment on what is being proposed and can suggest alternative contractors. The freeholder can only go ahead before you have had time to comment if the repairs needed are urgent and essential. If you are not properly consulted, get advice. You may not have to pay for the work.

How can service charges be challenged?

If you are not happy with the services you pay for, you can write to the freeholder explaining the problems. You may be able to negotiate a lower price or a better service. If the freeholder disagrees or refuses to doing anything to improve the situation, a Leasehold Valuation Tribunal (LVT) can decide whether or not the services you receive are reasonable.

The services are poor

In some cases, leaseholders are charged for services that are provided very badly or not at all. For example, you may be paying for weekly cleaning but the building is not cleaned regularly. In very extreme cases, an LVT may decide to appoint someone else to manage the building properly. The freeholder would still own the property but someone else would manage the services provided.

The charges are too high

You are entitled to a written breakdown of your service charges to check whether the costs are reasonable. Your freeholder is entitled to add a small management charge but cannot make a profit. You have the right to inspect and take copies of accounts, receipts and any other relevant documents. If the freeholder doesn't provide this information it's a criminal offence and the council can prosecute her/him. Get advice from a solicitor if you are in this situation.

What happens if I don't pay the service charge?

If you don't pay the service charge, the freeholder can take you to court. In theory you could lose your home but this is rare and doesn't happen automatically. The freeholder has to follow special procedures ('forfeiture proceedings') and get a court order. If s/he tries to evict you without one, it may be a criminal offence. If your freeholder has threatened to repossess your home because you haven't paid your service charge, get advice from a housing aid centre or citizens advice bureau immediately. Use our directory to find one.