The cost of living in leasehold properties across England and Wales has surged, as service charges have risen at a much faster rate than general inflation. According to our latest Service Charge Index, the average annual service charge bill reached £2,300 by the end of 2024, marking an 11% increase from the previous year. This growth rate is more than four times the Consumer Price Index (CPI) inflation of 2.5% for the same period.
While rising utility bills initially drove inflation, higher wage and insurance costs followed, resulting in the biggest increase in service charges since our records began.
Regional Disparities Emerge
Average annual service charges are now above £2,000 in every region of England for the first time. Only in Wales do average service charges still stand below the £2,000 per year threshold.
However, a notable North-South divide has developed in service charge increases over the past five years. The North East has experienced the most dramatic rise, with service charges up by 60.9% since 2019. This is in contrast to the southern regions of England, where the average increase has been a more modest 27.7% over the same period.
This is predominantly because new, amenity-rich buildings have become increasingly prevalent in northern cities. The higher number of large city centre schemes which offer a lift, gym and concierge facilities across the Midlands and North of England has pushed up costs in these areas. Consequently, service charges have risen much faster in the North of England than in the South.
The North West and Yorkshire & Humber have also seen significant increases of 57.6% and 40.2% respectively. Meanwhile, the four regions of Southern England (London, South East, South West and East) have seen average service charges rise by 27.7% over the same period, broadly tracking inflation and further highlighting this regional disparity.
Impact of Amenities
Given that service charges usually reflect the floor area of a property, there’s a clear correlation between property size and costs. In 2024, the average service charge for a one-bedroom flat in England and Wales surpassed £2,000 for the first time, reaching £2,007 annually. Two-bedroom flats now incur an average charge of £2,351, while three-bedroom flats face a more substantial £2,977 per year.
These figures reflect not only the larger floor areas, but also the increased complexity and cost of maintaining larger properties. The relationship between size and cost is not linear, however, with economies of scale playing a role in some larger developments.
Amenities also significantly influence service charge levels. Properties in developments with lifts command a 16% premium in service charges compared to those without. The presence of a gym adds a 24% premium, while a concierge service results in a 39% increase.
Long-term Implications
The five-year trend from 2019 to 2024 shows service charges rising by 33.9%, from £1,717 to £2,300 annually. This increase significantly outpaces the 23% rise in CPI over the same period, indicating that leaseholders are facing an increasing financial burden that extends beyond general inflation.
As a result, both buyers and mortgage lenders have become increasingly cautious about committing to high service charge costs, particularly where they perceive charges to be disproportionate to the amenities they get in return.
Would-be sellers paying high charges have often seen the value of their homes rise more slowly or even fall. In response, some sellers are offering potential buyers a cash contribution towards future service charge payments, a strategy that has become more common as charges have risen.
Looking Ahead
As service charges rise, there is growing pressure for leaseholders to have a more significant say in how their money is spent. While the Leaseholder Reform Bill touches on these issues, changes in how service charges are managed and allocated in the future might be on the horizon, potentially influencing future property development and how buildings are managed longer term.
