More than a third of flats in the UK may face significant selling difficulties due to high service charges, according to testimony delivered to a parliamentary committee this week.
Harry Scoffin, representing campaign group Free Leaseholders, told the Housing, Communities and Local Government Committee that flat owners are struggling to complete sales due to mortgage lending restrictions. “There is a crisis in the flats market at the moment. People cannot sell. They cannot move on,” he stated.
Service charge threshold concerns
The warning follows research published by Hamptons, which found that 37 per cent of flats have service charges equivalent to 1 per cent or more of the property’s value. Mortgage lenders typically restrict or refuse financing on flats where service charges exceed 1 to 2 per cent of the property price.
“What that means is those flats are unmortgageable. They are unsellable,” Scoffin explained during the Select Committee hearing on the Commonhold and Leasehold Reform Bill.
Rising costs outpace inflation
According to Hamptons research, the average service charge paid by flat owners reached £2,405 in the past year, representing a 4.6 per cent increase from 2024. Service charges for flats exceeded £200 per month for the first time.
Over the past five years, average service charges have risen 32.6 per cent, and 55.6 per cent over the past decade, outstripping inflation during both periods.
Reform concerns
Scoffin expressed concern that existing leaseholders could be disadvantaged by reforms promoting commonhold for new properties. “Everyone is going to rush to commonhold flats and those of us left in existing leaseholders are going to be trapped,” he said.
He called on the Government to expand reforms to enable existing leaseholders to convert to commonhold or purchase their freeholds. The Government has stated it is working to end the leasehold system and reduce cost pressures for leaseholders across the country.
