Average service charge for leasehold properties rises at over 4 times rate of inflation

The average annual service charge for a leasehold property in England and Wales rose 11% to £2,300 last year.

Figures from the estate agent Hamptons have revealed the biggest increase for at least eight years.

For many, this means their service charge is their largest monthly household bill after their mortgage.

Service charges usually cover the cost of maintenance and repairs, management expenses and building insurance.

There are 5.4 million leaseholders across England and Wales.

Last year’s rise of 11% is more than four times the 2.5% increase in the consumer price index (CPI).

A difficult sell

Since 2019, service charges have risen by 33.9% from £1,717 a year to £2,300 a year, compared to a 23% rise in CPI over that time.

The increasing financial burden means both buyers and mortgage lenders are more cautious when it comes to leasehold properties.

Sellers paying high service charges have seen the value of their homes rise more slowly and, in some cases, fall.

As a result, some are offering buyers cash towards the cost of future service charges.