London — The government has launched an urgent review of residential service charges amid complaints from leaseholders across England and Wales that rapidly escalating fees are squeezing household budgets, according to people familiar with the process.
Officials at the Department for Levelling Up, Housing and Communities (DLUHC) have begun gathering evidence on how managing agents calculate the annual costs that flat-owners pay for cleaning, insurance, safety upgrades and general upkeep of communal areas, the sources said. A consultation paper is expected to be published before Parliament’s summer recess.
Average service charges on purpose-built flats climbed to about £1,900 last year, up nearly 40 percent in a decade, research by property-data firm TwentyCi shows. Some residents in newer developments told the BBC they have faced double-digit increases in a single year, citing higher energy costs and post-Grenfell fire-safety work.
“For many first-time buyers, service charges are now the difference between staying afloat and falling behind on their mortgages,” said Sarah Prescott, policy lead at the HomeOwners Alliance. “The current system leaves leaseholders with little power to challenge opaque invoices.”
Under existing legislation, landlords and agents must provide itemised accounts when asked, but critics say tribunal action is slow and costly. Industry body ARMA counters that most charges are “reasonable and fully audited,” pointing to inflation in labour and materials. “Additional regulation risks pushing up costs further,” chief executive Nigel Glen said.
More than 4 million households in England and Wales own their homes on a leasehold basis, government data shows. In January, MPs on the cross-party Levelling Up Committee urged ministers to create an independent regulator for managing agents and cap certain administration fees—recommendations now under active consideration, according to two officials briefed on the talks.
Housing Secretary Michael Gove signalled support for reforms last month, telling the Commons that “excessive and unjustifiable service charges have no place in a fair housing market.” Options on the table include statutory budgets issued at the start of each financial year, fines for non-compliance, and a fast-track arbitration scheme.
Analysts at Savills say greater transparency could restore confidence in the struggling apartment sector, but warn any cap must be balanced against the need to fund vital safety works. “The policy challenge is preventing abuse without starving buildings of essential maintenance,” senior economist Lawrence Bowles noted.
The consultation’s findings will inform a Leasehold Reform Bill that ministers aim to introduce in the next session of Parliament. While legislation is unlikely to take effect before 2025, the prospect of tougher scrutiny is already prompting some management companies to revise budgets, according to market participants.
If successful, the overhaul could reshape the economics of urban home-ownership for a generation—offering relief to cash-strapped residents while forcing the property-management industry to rethink how, and how much, it charges.