Service Charge (Property)
A charge paid by leaseholders to the freeholder or management company to cover the costs of maintaining and repairing communal areas, buildings insurance, and shared services. Service charges must be reasonable and properly accounted for. Leaseholders can challenge unreasonable charges at the First-tier Tribunal (Property Chamber).
Service charges are governed by sections 18–30 of the Landlord and Tenant Act 1985. They must be reasonable in amount and only cover services specified in the lease. Freeholders must consult leaseholders ('Section 20 consultation') before incurring works costing any individual leaseholder more than £250, or entering a long-term qualifying agreement worth more than £100 per leaseholder per year. Failure to consult limits the landlord's recovery to £250 per leaseholder. Freeholders must provide a written summary of service charge costs on request and allow inspection of underlying accounts. The Leasehold and Freehold Reform Act 2024 strengthened transparency obligations on managing agents and introduced a new mandatory code of practice. Leaseholders can apply to the First-tier Tribunal (Property Chamber) to challenge the reasonableness of any service charge without needing to pay the disputed amount upfront.