"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"
- David Fell - Hamptons
The typical service charge for a flat in England & Wales rose 11.0% during 2024 to reach an average of £2,300 per year, or £192 per month. This reflects an acceleration in the pace of growth seen in 2023 when average annual service charges rose by 4.3%. 2024 marked the biggest annual increase since our index began in 2016.
This acceleration means that average service charges are now above £2,000 in every region of England for the first time. Only in Wales do average service charges stand below the £2,000 per year threshold.
Increasingly, this means service charges are leaseholders’ largest household bill after their mortgage. Our analysis shows that 51% of leaseholders are paying more in service charges than they are in council tax.
Over both the short and medium term, service charges have been rising faster than inflation. During 2024, service charges rose around four times faster than the Consumer Price Index, which increased by 2.5% over the same period. In the long term, between 2019 and 2024, the average service charge bill rose 33.9%, from £1,717 to £2,300 per year, while CPI rose 23.0% over the same period.
2024 saw the average one-bed service charge in England & Wales pass £2,000 per year for the first time. One-bed flats pay an average of £2,007 per year, up 11.5% year-on-year. Two-bed flats pay an average of £2,351, up 10.9% year-on-year and three-bed flats £2,977 annually, up 7.7%. Typically, charges reflect the floor area of the flat, with larger homes paying more.
Service charges also usually reflect the age of the building and the facilities being offered. Larger, amenity-rich developments have generally seen service charges rise much faster than smaller developments with fewer facilities.
Average service charges in developments with a lift stand 16% (or £364 per year) higher than those without. Meanwhile, there is a 24% (£561) service charge premium attached to developments offering a gym. Finally, there is a 39% (£892) gap between developments offering a concierge and those that don’t.
This means that the regions where service charges have risen most quickly over the last five years have also seen more new developments offer facilities that have become increasingly expensive to run and maintain.
The higher number of large city centre schemes which offer a lift, gym and concierge facilities across the Midlands and North of England has created a growing North-South divide. In recent years service charges have risen much faster in the North of England than in the South.
The North East has seen average service charges rise 60.9% over the last five years (2019 to 2024), a larger increase than anywhere else in the country. The North West followed with a 57.6% increase, and Yorkshire & Humber with a 40.2% increase. 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.
“Service charges continue to be pushed up by climbing costs," explained David Fell, Lead Analyst at Hamptons, "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. With a high proportion of service charges taken up by labour and building insurance, most leaseholders will have seen their bills continue to rise in recent years.
He added, “While the cost of running a home has risen for pretty much every household over the last five years, some leaseholders have seen costs rise much more quickly. And with limited ways to find savings, the cost of running some facilities, which were affordable five or 10 years ago, could now be breaking the bank.
“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. Consequently, there is mounting pressure for leaseholders to have a greater say in how their money is spent.
“Would-be sellers paying high charges have often seen the value of their homes rise more slowly or even fall. In some cases, sellers are offering potential buyers a cash contribution towards future service charge payments,” David concluded.
