The average annual service charge sees an 8% surge leaving leaseholders asking for increased payment demands. This surge was witnessed in the last 12 months and is mostly due to the wider inflation rate.
Because of this surge, leaseholders now must pay a total of roughly £7.6 billion every year in service charges, covering the 5.4 million flat owners across England and Wales.
The Current Charges In The UK
Currently, the annual service charge for a one-bedroom flat is at £1,287 a year, which is the same as the charge for a three-bedroom flat in 2018. This stands as an example of the increase in service charges.
Similarly, the current charges for a two-bedroom flat are £1,426 a year and that for a three-bedroom flat is £1,876 a year. While the above-mentioned prices are the average, the service charge has been noted to be the highest in London as compared to other places in the country. Standing at an average of £1,792 a year, which is 25% higher than the average for England and Wales.
Can There Be Low Charges?
Although the service charge has increased, there can still be certain places where the lowest service charges can be applicable. These include smallest blocks, containing less than five flats, and converted houses. The average annual service charge in these blocks is £1,309.
The limited grounds and communal spaces, along with the residents who are responsible for having the maintenance done themselves, help keep the charges low.
Roughly half of all the flats across England and Wales are in blocks of either 20 or more, leaving very few to be applicable for the reduced service charges. Averaging at £2,606, the service charge in the bigger blocks is 99% higher than the smallest blocks.
Will The Service Charge Be Lowered?
While it won’t be seen overnight, it is highly likely for the service charge to be reduced. This is in relation to the recent fall in the price of some building materials as well as the reduced energy costs.
Because the commercial contracts for communal utilities are exempt from the price cap, quite a few leaseholders will be seeing the benefit of falling prices but will have to wait to experience it.
