Unreasonable Service Charges – Time for Reform

The latest Jewish News

Read this week’s digital edition

Click Here
Promoted Content

Unreasonable Service Charges – Time for Reform

Laurent Vaughan, a Senior Associate in Bishop & Sewell’s Landlord & Tenant team, considers service charges and the need for leasehold reform

Laurent Vaughan - Senior Associate (Bishop & Sewell Solicitors)

According to the Association of Residential Managing Agents, the average service charge in London should be in the region of £2,000 a year for a two-bedroom flat. However, with rising inflation, millions of leaseholders across the country have seen their service charges rise and unfortunately, there is currently no legislation in place which would cap the annual level of increase.

Neither the Law Commission nor the Government have made any pledges to address the widespread problems concerning service charges. In the meantime, leaseholders face an uphill battle against managing agents and freeholders in respect of the excessive cost that are included in their service charge bills.

An application can be made to the First Tier Tribunal for a determination as to amount of service charges that is properly payable. The First Tier Tribunal will assess the reasonableness of the service charge cost by reviewing the market rates of the cost of services and particular items.

A well-reported victory was secured by leaseholders of a block of flats in Canary Wharf in December last year after the Tribunal determined that they were overcharged by £1.6 million – comprising an overpayment of £1.5 million to a managing agent for insurance-related services and £121,000 in linked taxes. It is also widely reported that managing agents are selecting insurance policies that maximise their own profits, rather than policies that offers the best value for leaseholders.

Whilst there is scope under the legislation for leaseholders to write to freeholders and obtain a copy of the insurance policy, which freeholders must oblige within twenty one days, the Canary Wharf case demonstrates the complete lack of transparency with leaseholders concerning these commission payments. It is often difficult for leaseholders to prove that the commission payment had been the driving factor behind the decision to select a particular policy. Although the victory was significant for the leaseholders in that case, millions of other leaseholders may not be armed with the same level of capital and time, in litigating against unscrupulous managing agents.

Leaseholders may be better off preserving their energy and capital by bringing a claim to take over the management of the building through a ‘Right To Manage company’ (RTM). In other words, take control of the management of their building without having to demonstrate any mismanagement on part of the managing agent or freeholder. In doing so, the RTM company will be able to procure cost- effective services, including insurance contracts over which they will be able to gain control.

With the Government facing negative press coverage following a series of leasehold scandals, and a general election scheduled to take place no later than January 2025, it is widely anticipated that the Kings’ Speech in November this year will set out its fresh legislative agenda in order to tackle the many ‘abuses’ arising out of the leasehold sector. Although Michael Gove no longer remains committed to dismantle the ‘old and feudal’ leasehold system, we wait with bated breath the extent of any reforms, particularly if the country turns red following the election.

Bishop & Sewell’s Landlord and Tenant team are industry experts on Leasehold Reform legislation, including Enfranchisement, Lease Extensions and Right to Manage.

If you would like to discuss any of the points raised in this article, please do not hesitate to contact the Landlord & Tenant team on 0207 079 4193 or via email leasehold@bishopandsewell.co.uk. You can visit the website at www.bishopandsewell.co.uk

Support your Jewish community. Support your Jewish News

Thank you for helping to make Jewish News the leading source of news and opinion for the UK Jewish community. Today we're asking for your invaluable help to continue putting our community first in everything we do.

For as little as £5 a month you can help sustain the vital work we do in celebrating and standing up for Jewish life in Britain.

Jewish News holds our community together and keeps us connected. Like a synagogue, it’s where people turn to feel part of something bigger. It also proudly shows the rest of Britain the vibrancy and rich culture of modern Jewish life.

You can make a quick and easy one-off or monthly contribution of £5, £10, £20 or any other sum you’re comfortable with.

100% of your donation will help us continue celebrating our community, in all its dynamic diversity...


Being a community platform means so much more than producing a newspaper and website. One of our proudest roles is media partnering with our invaluable charities to amplify the outstanding work they do to help us all.


There’s no shortage of oys in the world but Jewish News takes every opportunity to celebrate the joys too, through projects like Night of Heroes, 40 Under 40 and other compelling countdowns that make the community kvell with pride.


In the first collaboration between media outlets from different faiths, Jewish News worked with British Muslim TV and Church Times to produce a list of young activists leading the way on interfaith understanding.


Royal Mail issued a stamp honouring Holocaust hero Sir Nicholas Winton after a Jewish News campaign attracted more than 100,000 backers. Jewish Newsalso produces special editions of the paper highlighting pressing issues including mental health and Holocaust remembrance.

Easy access

In an age when news is readily accessible, Jewish News provides high-quality content free online and offline, removing any financial barriers to connecting people.

Voice of our community to wider society

The Jewish News team regularly appears on TV, radio and on the pages of the national press to comment on stories about the Jewish community. Easy access to the paper on the streets of London also means Jewish News provides an invaluable window into the community for the country at large.

We hope you agree all this is worth preserving.