Service Charge (Property)

Service charges are governed by sections 18–30 of the Landlord and Tenant Act 1985. They must be reasonable in amount and only cover services specified in the lease. Freeholders must consult leaseholders ('Section 20 consultation') before incurring works costing any individual leaseholder more than £250, or entering a long-term qualifying agreement worth more than £100 per leaseholder per year. Failure to consult limits the landlord's recovery to £250 per leaseholder. Freeholders must provide a written summary of service charge costs on request and allow inspection of underlying accounts. The Leasehold and Freehold Reform Act 2024 strengthened transparency obligations on managing agents and introduced a new mandatory code of practice. Leaseholders can apply to the First-tier Tribunal (Property Chamber) to challenge the reasonableness of any service charge without needing to pay the disputed amount upfront.

In practice, a service charge challenge is won on documents, not on indignation. The lease is the starting point: it dictates which costs are recoverable at all and how they are apportioned between flats. A cost that is reasonable in amount but not recoverable under the lease is still not payable. Ask for the annual accounts, the summary of costs, and the invoices behind the largest lines, and put the request in writing so the statutory time limits bite.

Worked example: leaseholders in an eight-flat block receive a demand including £22,000 for external redecoration. Each flat's share exceeds £250, so the freeholder was required to run a full section 20 consultation: a notice of intention, an opportunity to nominate contractors, estimates circulated with a further consultation period, and a statement of reasons for the chosen contractor. The freeholder skipped the estimates stage. Unless it obtains dispensation from the tribunal, its recovery is capped at £250 per leaseholder. The leaseholders apply to the First-tier Tribunal, relying on the missing notices rather than arguing about paint quality.

The pitfalls catch people out. Withholding payment without following the correct process risks arrears and, in the worst case, forfeiture proceedings, so the safer route is to pay under protest or apply to the tribunal. Demands must be in the prescribed form, name the landlord, and be accompanied by the summary of rights and obligations — a defective demand is not payable until corrected. There is also an 18-month rule: costs incurred more than 18 months before a demand are irrecoverable unless the leaseholder was notified in writing within that period that the costs had been incurred. And reserve fund contributions are only payable if the lease provides for them.

Service charges are a feature of leasehold ownership, sit alongside any ground rent, and are collected by or on behalf of the freeholder. If your charges have jumped, read our guides to challenging service charges and the right to manage, which is often the longer-term answer.