The average service charge for a flat in England and Wales rose 11% over last year to an average of £2,300 per year or £192 per month, data from an estate agency found.
The Hamptons Service Charge Index revealed this outpaced consumer price inflation of 2.5% and meant every region in England had an average service charge above £2,000.
This was also the biggest increase in service charges since Hamptons started reporting data in 2016. Further, it indicated an acceleration in the growth recorded in 2023, when average annual service charges increased by 4.3%.
Hamptons said service charges had been rising faster than inflation in the short and medium term. Last year, service charge inflation was around four times faster than CPI, while between 2019 and 2024, the average service charge bill increased by 33.9% from £1,717 per year to £2,300. Over the same period, CPI rose by 23%.
Service charge is a big cost for leaseholders
Hamptons said service charge was the largest bill for many leaseholders after their mortgage, with its analysis suggesting 51% were paying more in service charge than their council tax.
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It was also the first time that the average service charge for a one-bed flat in England and Wales exceeded £2,000, with an 11.5% annual rise putting this at £2,007.
Two-bed flats have an average service charge of £2,351, 10.9% higher than the year before, while three-bed flats charge £2,977, a 7.7% annual rise.
Service charges also depend on the amenities offered at a property, as buildings with a lift have a cost of 16% or £364 more per year than those without.
Buildings attached to a gym have a service charge that is 24% or £561 higher on average, while there is a 39% or £892 gap between properties with a concierge and without.
Hamptons said this suggested there were larger increases in areas where there were more new developments with expensive facilities.
Its report said this had created a North/South divide, as more buildings in the Midlands and North of England offered a lift, gym and concierge. This has resulted in a 60.9% rise in average service charge costs in the North East over a five-year period to £2,048 – the biggest increase recorded.
This was followed by the North West, with a five-year growth of 57.6% to £2,136, then Yorkshire and the Humber, where annual service charge costs were £2,053, 40.2% higher than in 2019.
In contrast, London, the South East, South West and East of England have seen the increase in service charges coincide with inflation, at 27.7% on average.
It was only in Wales where average service charges of less than £2,000 per year were found, rising 20.8% over five years to an average of £1,767 per year.
The annual service charge in London was the highest at £2,633, representing a growth of 39% since 2019.
David Fell, lead analyst at Hamptons, said: “Service charges continue to be pushed up by climbing costs. While rising utility bills initially drove inflation, higher wage and insurance costs followed, resulting in the biggest increase in service charges since our records began. With a high proportion of service charges taken up by labour and buildings insurance, most leaseholders will have seen their bills continue to rise in recent years.
“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.”
He added: “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.”
