Leasehold service charges explained
Leaseholders pay charges to freeholders for services such as:
building insurance
management costs
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 do not 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.
Get advice about service charges from LEASE if you're worried about your agreement.
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.
Ground rent
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 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 might want to challenge service charges if:
the charges are high
work was not done or was done badly
You can also challenge them if you:
cannot find out how your service charges are being spent
are charged for services or works not in your lease
Talk to your freeholder
Explain why you're unhappy with charges, works or services.
Use alternative dispute resolution
LEASE explain formal dispute resolution if your freeholder will not deal with your concerns.
Go to court
LEASE explain how to 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.
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
They must also consult your tenants' association 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
Requesting accounts
Your freeholder must send you a summary of service charges if you write and ask for it.
You can ask for 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 do not.
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 cannot usually be charged more in the first 5 years of your lease, although there is allowance for inflation.
If you do not 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.
Contact LEASE if your freeholder starts court action against you.
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.
Repairs
Your freeholder is generally responsible for repairs to structures and communal areas.
Still need help?
LEASE could help if you have questions about service charges.
Last updated: 15 January 2024
