Leasehold service charges explained
Leaseholders pay charges to freeholders for services such as:
caretakers or concierges
lighting, heating and cleaning of shared areas
repairs, maintenance and work on shared areas or the building structure
You usually have to pay a share of everything even if you don't use some services.
What you can be charged for
Services charges should be set out in your lease. You do not have to pay for services that are not in your lease.
Reserve or sinking funds
You may have to pay into a fund for future works.
This is called a reserve or sinking fund. It helps spread the cost of expensive works.
You pay ground rent to your freeholder for the land your home is on.
Make sure your solicitor checks and tells you about ground rent in the lease when you buy.
Some ground rents can increase quickly.
How much are service charges?
Service charges can change from year to year.
Your lease should say:
how service charges are calculated
how charges are split between leaseholders
if there is a sinking or reserve fund
Make sure your solicitor checks when you buy.
How to challenge service charges
You may want to challenge service charges if:
the charges are high
work wasn't done or was done badly
You can also dispute them if:
you can't find out how your service charges are being spent
you're charged for services or works not in your lease
Start with your freeholder
Contact your freeholder if you are unhappy with charges, works or services.
Alternative dispute resolution
LEASE explains formal dispute resolution if your freeholder won't deal with your concerns.
Take your freeholder to court
You can challenge a service charge at first tier tribunal.
The tribunal looks at the costs and services or works. They decide if the charges are reasonable.
You need a solicitor. Find a solicitor at the Law Society.
Your right to be told about planned works
The freeholder must let you know if they plan:
works that will cost individual leaseholders over £250 a year
to use a contractor for over a year that will cost individual leaseholders over £100 a year
Your tenants' association must also be consulted if you have one.
You have the right to comment on proposals and to suggest other contractors. Your freeholder must give you:
at least 30 days to comment in writing.
cost estimates for the work
Taking part in a consultation does not mean you agree to the works.
LEASE has more about consultation for major works.
Paying your service charge
Your lease sets out when you must pay.
You will get a payment demand. It must have:
the name and address of the freeholder
a summary of your rights and obligations
If you don't pay
Your freeholder can go to court to get unpaid charges.
Let your freeholder know if you are having problems meeting your payments. You normally have the chance to stop problems going too far.
Waiver for housing association and council tenants
Tell your freeholder if you're struggling to pay service charges.
Your freeholder can sometimes stop or reduce your service charges if they are too hard for you to meet at that time.
Your freeholder must send you a summary of service charges if you write and ask for it.
You can ask to look at proof of how your money has been spent.
Your freeholder must do this within one month of your request. They can be fined if they don’t.
Right to Buy or Right to Acquire
Your offer notice from the council or housing association has a service charges estimate for the first 5 years.
You can't usually be charged more in the first 5 years of your lease, although there is allowance for inflation.
Your freeholder is generally responsible for repairs to structures and communal areas.
Still need help?
Contact LEASE if you have questions about service charges.
Last updated: 24 January 2022