Mention the words “service charge” to a room full of property investors and watch the mood change. It’s up there with “leasehold” and “cladding” as one of those phrases that gets an instant, visceral reaction, usually before anyone’s actually looked at what it pays for. We get asked about it in nearly every client conversation we have, so it’s worth properly unpacking rather than just nodding along to the general consensus that service charges are a rip-off.
And to be fair to the sceptics, the numbers back up some of that mood. According to Hamptons’ 2025 Service Charge Index, the average leaseholder in England and Wales now pays £2,405 a year, or £200.42 a month, having risen 32.6% over the past five years, comfortably outpacing inflation. So no, you’re not imagining it: charges have gone up, and gone up fast. So what do service charges on new build flats actually cover, and how can an investor tell whether they’re reasonable?
Strip away the reputation and a service charge on a new build flat is simply your contribution to keeping the building functioning and looking like somewhere people want to live. That typically includes:
None of that is optional extra fluff. It’s the stuff that keeps the building insured, keeps it looking good from the kerb, and keeps it mortgageable and lettable. A poorly maintained block, neglected communal areas or inadequate insurance arrangements can make a property less attractive to tenants and buyers, potentially affecting both rental demand and resale, and that hits your return a lot harder than £200 a month ever will.
Worth knowing too: the national average hides huge regional variation. London sits at £2,801 a year, driven by taller buildings and heavier amenity provision, while around 30% of flats in the North East carry a service charge under £100 a month. Most of our portfolio sits in regional city centres rather than premium London towers, which is one of the quieter reasons the numbers below look the way they do.
This is the bit that gets missed most often, and it’s the crux of nearly every debate about service charges on new build flats versus buying freehold instead. Buy a freehold house and you don’t magically avoid paying for any of the above.
You still need buildings insurance. You still need the guttering cleared, the roof checked, the boiler serviced, the garden kept tidy (or you’re doing it yourself on a Sunday morning, which is its own kind of cost). A commonly used rule of thumb is to budget around 1% of a property’s value a year for maintenance, though actual costs vary considerably depending on the property’s age, condition and construction. Separate research from Benham and Reeves puts the average UK homeowner’s actual annual maintenance spend at around £2,700, rising to over £5,000 in London, which gives a sense of the real range rather than a precise universal figure. And crucially, you don’t get a sinking fund. When the roof needs replacing on a freehold house, there’s no reserve pot building up quietly in the background. You get one bill, all at once, usually delivered by a builder with a clipboard and bad news, and it’s rarely a small one.
Here’s a real example worth sitting with. Forum House in St Albans carries a service charge of around £116 a month, or £1,392 a year*, covering buildings insurance, communal cleaning and maintenance, allocated parking, an on-site work-from-home space, a communal games room and a residents’ lounge. At roughly 0.46% of a £300k purchase price, that sits well below both the 2025 national leasehold average of 0.90% and the 1% mark where mortgage lenders start getting twitchy (more on that below).
Worth being upfront: Forum House sits toward the lower end of what you’ll find across our portfolio. Larger schemes with lifts, more communal amenities or a bigger footprint naturally carry a higher charge, and the right comparison is always against that specific development’s own budget, not a single flagship example.
At a glance
| Annual cost | Forum House, St Albans* | 2025 national leasehold average | Freehold house (£300k, indicative) |
|---|---|---|---|
| Service charge | £1,392 (£116/month) | £2,405 (£200/month) | N/A |
| Ground rent | £0 | Varies, £0 on qualifying leases since 2022 | N/A |
| Buildings insurance | Included above | Included above | ~£310 (ABI average, Q4 2025) |
| Gutter cleaning | Included above | Included above | ~£100 (once or twice a year) |
| Window cleaning | Included above | Included above | ~£180 (roughly every 6 to 8 weeks) |
| Gardening / grounds upkeep | Included above | Included above | ~£200 if outsourced (or your own time, which isn’t free either) |
| Reserve for major repairs | Included above* | Included above, where the lease provides for it | ~£3,000 (1% of value, common rule of thumb) |
| Total estimated annual cost | £1,392 | £2,405 | ~£3,800 |
*Subject to confirmation from the development’s service charge budget/lease documentation. Freehold figures are indicative estimates and exclude one-off major works, which freehold owners fund as lump sums rather than through a reserve.
Worth flagging too: buying freehold doesn’t always mean paying nothing beyond your own maintenance. An estimated 1.6 million homes in England and Wales, mostly on newer estates, already pay a separate estate charge (sometimes called an estate rentcharge) for the upkeep of shared roads, green spaces or drainage systems the council never adopted. These typically run from a few hundred pounds a year to well over £3,000 on larger, amenity-heavy estates, and unlike a leasehold service charge, they currently sit outside most of the consumer protections covered above, which is exactly why the government is separately looking at estate management charge reform. So “freehold” doesn’t automatically mean charge-free. It just means the charge, if there is one, has a different name and, for now, less regulation behind it.
To be fair to the sceptics again, the reputation didn’t come from nowhere. There are real, legitimate reasons people have been burned:
This isn’t just anecdotal either. Hamptons’ research adds real texture: in 2025, 37% of flats in England and Wales carried a service charge above 1% of their value (up from 29% five years earlier), a threshold that matters because some mortgage lenders have tightened underwriting criteria to exclude flats where charges routinely exceed it, think a £4,000 annual charge on a £300,000 flat. A further 14% exceeded 2%, and 6% exceeded 3%, disproportionately concentrated in city-centre developments. With a smaller pool of lenders willing to look at higher-charge flats, borrowing gets harder and pricier, and it shows up at resale too: flats priced with a service charge at or below 1% of value were 50% more likely to find a buyer in 2025 than those at 2% or more (Hamptons’ 2025 Service Charge Index). That’s a genuine, quantifiable risk, not just a horror story doing the rounds on property forums.
Blaming service charges generally for that is a bit like blaming your bank account because someone once ran up a huge overdraft in it: the tool isn’t the problem, the management of it is.
Ground rent gets lumped in with service charges in most people’s minds, understandably, since both arrive via the same lease. But it’s worth separating the two, because the picture here has already moved on more than most buyers realise.
The Leasehold Reform (Ground Rent) Act 2022 already restricted ground rent to a token “peppercorn” on new long residential leases granted from 30 June 2022 onwards. If you’re buying new build today, that historic escalating ground rent problem generally does not apply to qualifying new leases, subject to the limited exceptions set out in the legislation, such as certain community-led housing and financial products (see the government’s guidance on the ground rent ban).
Leasehold reform is also continuing, and it’s worth being current on where it actually stands rather than where it stood back in 2024. The Leasehold and Freehold Reform Act 2024 introduced the framework, but much of it needed secondary legislation to actually take effect. In July 2026, the government confirmed it’s proceeding with a package of service charge transparency measures under that Act: a mandatory annual report from landlords on a building’s condition and planned works, a standardised service charge demand form, and stronger rights for leaseholders to request maintenance and insurance information going back six years. These are expected to start coming into force “as soon as possible from 2027” (see the government’s official response on service charge and leaseholder protections). Separately, a draft Commonhold and Leasehold Reform Bill published in January 2026 proposes making commonhold the default tenure for new flats altogether, though that’s still at an early, pre-legislative stage. If you want the fuller picture on your rights as a leaseholder, including how to challenge a service charge you think is unreasonable, LEASE, the government-funded Leasehold Advisory Service, has a clear guide to it.
The truth about service charges on new build flats is that they’re not inherently good or bad. What matters is what each one covers, how it compares with the property’s value, how well it’s managed, whether the budget is realistic, and what it does to your net return.
That last point is exactly why we review the service charge budget, ownership structure and management arrangements on every development before it goes anywhere near a client, as part of our wider due diligence process. You should be able to see how a building is run and what you’re actually paying for before you commit, not find out the hard way in year two.
What is a typical service charge on a new build flat?
Nationally, the average leaseholder paid £2,405 a year in 2025, though new build charges vary enormously depending on location and specification. Regional developments, particularly those without lifts, concierge or extensive amenities, routinely come in well below that. Forum House in St Albans, for example, sits at £1,392 a year.
Are service charges on new build flats always high?
They can, particularly in London or amenity-heavy schemes, but it’s not automatic. Charge levels depend far more on building type, amenity provision and how tightly the budget is managed than on whether the building is new.
Are service charges included in rental yield calculations?
They should be. Gross yield ignores costs entirely, but net yield deducts service charges, ground rent, insurance and management fees from rental income, which is why a flat with a high service charge relative to its rent can look far less attractive once you run the real numbers – we scrutinise the numbers in detail with every client when we have a discovery call.
Can a service charge affect getting a mortgage?
Yes. Some lenders tighten their criteria once a service charge exceeds around 1% of a property’s value, and flats above that threshold are also harder to resell.
Do new build flats have ground rent?
Not if the lease was granted from 30 June 2022 onwards. The Leasehold Reform (Ground Rent) Act 2022 restricts ground rent on qualifying new leases to a peppercorn, subject to a small number of exceptions.
Can you challenge an unreasonable service charge?
Yes. Leaseholders can apply to the First-tier Tribunal (Property Chamber) to challenge whether a service charge is reasonable, and LEASE’s guidance sets out how that process works.
Whether you buy freehold or leasehold, you’re paying to keep a roof over your head in good condition, one way or another. That’s the real story behind service charges on new build flats: the only question that matters is whether the cost is transparent and proportionate to the property’s value, or opaque and rising for no good reason.
New build, with a modern resident-favourable structure, a 999-year lease and no ground rent, gives you a much better starting point for answering that question than most alternatives. If you’d like to see the service charge budgets and ownership structures behind our current developments before making any decisions, get in touch and we’ll walk you through them.
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