Forty percent of leaseholders have experienced unexpected increases in their service charges, according to a survey of 2,000 leaseholders published in a new report.
The research found that service charges were identified more frequently than ground rents as the cost that had risen unexpectedly, highlighting concerns about the transparency and predictability of leasehold expenses.
Investor group calls for reform focus
The report was commissioned by Justice for Property Rights, a coalition representing investors, retirees and freeholders. The group has argued that current leasehold reform proposals could result in losses exceeding £30 billion to property owners.
Richard Merrin, spokesperson for Justice for Property Rights, said: “Leaseholders are telling us that the issues affecting them every month are service charges, transparency, accountability and confidence in the management of their buildings. This is not an argument against reform. It is an argument for ensuring that reform reflects the evidence and addresses the issues leaseholders themselves identify as having the greatest impact on their everyday lives.”
Under proposed legislation, ground rents for most existing long leases will be capped at £250 annually. The investor group states it supports action against unfair lease terms and efforts to make commonhold a workable alternative, but warns that current proposals risk “retrospectively reducing or extinguishing rights” without clear compensation commitments.
Service charge data shows sustained increases
The findings align with data from Hamptons published earlier this year, which showed that the average service charge paid by flat leaseholders reached £2,405 in 2025, representing a 4.6% increase on 2024 and marking the first time monthly charges exceeded £200.
Hamptons reported that 37% of flats had service charges exceeding 1% of their property value in 2025, compared to 28% a decade earlier. Some mortgage lenders are unwilling to lend on properties above this threshold, according to the firm.
The data also indicated that flats with service charges at or below 1% of their value were 50% more likely to sell than those with charges of 2% or more, suggesting that rising service charges are affecting property marketability and investment decisions.
Market implications
The focus on service charges rather than ground rents in leaseholder concerns may influence the direction of future leasehold reform legislation. While government proposals have concentrated on capping and reducing ground rents, the survey suggests that leaseholders prioritise issues around building management costs and transparency.
For property investors and buyers, the data indicates that service charge levels are becoming an increasingly important factor in both property valuations and saleability, particularly as more flats cross the 1% threshold that triggers lender caution. The findings may prompt greater scrutiny of service charge histories and management arrangements during property transactions.
