Leaseholders in older, taller buildings face annual service charge of over £7,000, but costs may have levelled out

This new data shows Building Safety Act 2022 compliance costs have risen 53% since 2024, though they still represent a relatively small proportion of the overall bill, at 1.5% of total budgeted spending for 2026.

At the same time, on-site staffing costs – including concierge services, building managers and maintenance managers – are up 11%, while management fees have risen by 2%.

TPI reports a fall in utility and building insurance costs, of 7% and 4% respectively, but repairs and maintenance are still the single largest category of expenditure, at just over 20% of total spending. It has fallen slightly, by 3%.

This annual research covers 2,137 residential estates and 117,052 leasehold homes from 13 managing agents, and provides a detailed breakdown of costs across residential blocks with 10 or more flats.

The average service charge bill stands at £2,880 per leaseholder in 2026, up 5.8% since 2024. This means service charge costs have risen by less than the Consumer Price Index of 6.1% over the same period. 

But behind that headline figure lies significant variation. Leaseholders in the bottom 10th percentile of the dataset pay an average of £1,525 a year, while those in the top 10th pay £8,680.

The member body believes one explanation for the charges levelling out could be “a welcome increase in reserve funds”, which is money set aside over time to pay for major planned works such as roof replacements, lift renewals, external redecoration and other large-scale maintenance. 

The data highlights reserve fund contributions have risen by 26% since 2024 and account for 16.4% of total budgeted spending in 2026. 

It remains to be seen if reserve fund contributions will be sustained in the coming years, but the index data suggests that service charge budgets are increasingly having to address historic underfunding for major works, particularly in ageing buildings.

Responsibility for service charges remains a thorny issue across the sector. During an MP-led inquiry, a sector expert called for service charges to be regulated and said there was an issue with shared ownership being sold as an affordable product.

However, the housing minister rejected the need for a regulator of services charges in response to a query from Inside Housing earlier this month.

Last year, Inside Housing reported shared owners at a block in Battersea could be left footing the bill for services provided to private owners on a large estate as Notting Hill Genesis sought to challenge an earlier tribunal ruling.

In addition, executors of extra-care shared ownership properties are struggling to settle their family members’ estates due to rising service charge costs and leasehold concerns.

TPI said: “The data points to the need for more robust design and construction standards in high-rise buildings, so that the long-term cost of maintaining them does not fall disproportionately on residents as buildings age.

“Poor design and construction quality drives up long-term maintenance costs, and without reform at the planning stage, those costs will inevitably fall on residents.”

TPI is calling for mandatory 30-year capital expenditure plans for maintenance and management to be required at the planning stage for all new developments, ensuring that reserve funds are properly structured from the outset.

This is because buildings built to higher standards should cost less to maintain and place less financial pressure on residents over time.

Andrew Bulmer, chief executive of TPI, said: “The fact that service charges have broadly tracked inflation over the past few years will provide a degree of reassurance for leaseholders. 

“We hope this index provides some clarity on how that money is being spent and why certain types of buildings cost more to repair and maintain.

“There is no silver bullet that will make service charges disappear, but they can and should be made far more predictable and transparent. We want mandatory reserve funds, long-term capital expenditure plans and a fully regulated profession to give residents the confidence that, when they move into a new home, the building is financially prepared for the future and managed by people who are qualified, competent and accountable.

“For most people, a home represents the single greatest financial commitment of their lifetime, and yet under the current system, too many people are moving without visibility on the long-term financial resilience and professional management of their building.”

TPI is reiterating its call for mandatory regulation of property managers. The body hopes this will drive up standards and ensure buildings are well managed, and restore confidence in leasehold and commonhold ownership.

However, a House of Lords committee heard last year why oversight of managing agents may not improve the experience of residents and leaseholders waiting for, and fronting the cost of, remediation work.

In addition, there should be mandatory reserved funds to correct years of underfunding, but TPI believes this requires legislation.

TPI said: “Without it, leaseholders remain exposed to sudden, unmanageable bills, and developers retain an incentive to omit reserve funds at the point of sale to keep headline service charges artificially low.”

Harry Scoffin, founder of campaign group Free Leaseholders, said: “In a market where flat values are falling behind houses at their widest gap in 30 years, buyers are increasingly steering clear of leasehold homes and their unlimited liabilities.

“Claims that high and increasing service charges are inevitable don’t stand up when our supporters who secure [the] right to manage are achieving average savings of 20%–30% by cutting commissions and choosing local contractors.”

The Greater London Authority recently announced it will explore why service charges are getting more expensive in the capital.