What your service charge actually pays for - and how to tell if you're overpaying.

A plain-English guide to understanding the numbers, challenging costs, and knowing your rights as a leaseholder or freeholder. 

Service charges are one of the most misunderstood aspects of leasehold property — and one of the most contentious. For many leaseholders, the annual demand arrives, looks expensive, and leaves them with no real way to judge whether it's fair. For freeholders and RTM companies, poorly managed service charges mean arrears, disputes, and legal risk. Getting this right matters for everyone.

A service charge is a contribution towards the cost of maintaining and managing a building's communal areas and services. This typically includes buildings insurance, cleaning and grounds maintenance, communal utilities, routine repairs, management fees, and contributions to a reserve or sinking fund for major future works. What it should not include: costs that are not permitted under the terms of the lease, or that are unreasonable in amount.

The key question is not 'is my charge high?' but 'is my charge justified?' Red flags include: vague line items with no supporting invoices, management fees above 10–15% of total costs without explanation, insurance premiums that haven't been competitively tendered in years, and a sinking fund that never seems to grow despite regular contributions. If you request a summary of costs and your managing agent struggles to provide one, that itself is telling.

Leaseholders have a statutory right to request a written summary of service charge costs, and to inspect the underlying invoices and receipts. If you believe charges are unreasonable, you can challenge them at the First-tier Tribunal (Property Chamber) — and the burden of proof lies with the landlord or managing agent to demonstrate that costs are reasonable. This is a powerful protection that too few leaseholders know they have.

We operate with full financial transparency. Every client has access to a live breakdown of their service charge expenditure. We competitively tender major contracts, benchmark insurance annually, and produce year-end accounts that are independently certified. We've reduced service charges for new clients by an average of 12–15% in the first year — not through cuts, but through scrutiny that was previously absent.

If you're not sure whether your service charge represents value for money, we're happy to take a look. We offer a free, no-obligation review for freeholders and RTM companies considering a switch. Get in touch to find out more.