Rising service charges in England and Wales are putting increasing financial pressure on leaseholders, with the average cost now exceeding £2,300 per year. This significant increase surpasses inflation and highlights the growing affordability concerns for leaseholders.
Average service charges for flats in England and Wales have soared to a new high of £2,300 per year, marking an 11% increase from the previous year. This significant jump significantly surpasses the 4.3% rise observed in 2023 and represents the most substantial annual increase in recent history. The acceleration in service charge costs has resulted in a notable phenomenon: for the first time, average service charges now exceed £2,000 in every region of England .
London, in particular, experiences the highest service charges at £2,633 per year. These charges, levied on leaseholders, constitute a substantial financial burden for those who own their homes for a predetermined period. Hamptons' analysis reveals a concerning trend: over half (51%) of leaseholders are now paying more in service charges than they are in mortgage repayments. Furthermore, the data indicates that service charges have been consistently rising at a rate faster than inflation over both the short and long term. In 2024 alone, service charges surged roughly four times faster than the Consumer Price Index (CPI) measure of inflation, which registered a 2.5% increase during the same period. Extending the analysis to a longer timeframe, between 2019 and 2024, the average service charge bill witnessed a staggering 33.9% surge, escalating from £1,717 to £2,300 per year, while CPI rose by 23% over the same period.Service charges are typically influenced by the building's age and the amenities provided. Larger developments with an abundance of facilities have generally experienced significantly faster increases in service charges compared to smaller developments with fewer amenities. David Fell, Lead Analyst at Hamptons, emphasizes the escalating financial strain on leaseholders: '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.' Fell further highlights the pressure mounting on leaseholders to exert greater control over their service charges: '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.'
SERVICE CHARGES LEASEHOLDERS ENGLAND WALES INFLATION HOUSING COSTS
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