Flat leaseholders in England and Wales now pay an average service charge of £2,405 a year – £200 a month – for the first time, according to new data from Hamptons. The figures highlight growing costs that are squeezing yields for landlords who own leasehold flats and affecting the saleability of properties.
Charges up 55% in a decade
Service charges rose 4.6 percent in 2025, building on a 32.6 percent increase over the last five years and a 55.6 percent jump over the past decade – well above inflation. For landlords holding leasehold flats as investments, these rising costs directly erode net rental income.
David Fell, lead analyst at Hamptons, said many leaseholders “have seen the economic efficiencies of sharing a single roof with their neighbours steadily eroded by rising running costs.” He warned that “the city centre flat boom, which took off in the mid-1990s, means many bigger blocks of flats are now turning 30. This can mean that big-ticket items such as roofs, lifts, and windows are approaching the end of their life.”
London has the highest charges and the fastest increases. The average London flat service charge now stands at £2,801 per year (£233.45 monthly), up 6.4 percent year on year, 41.2 percent over five years, and 64.5 percent over the last decade.
Mortgage lending affected
The impact extends beyond running costs. More than a third of flats (37 percent) now have service charges exceeding 1 percent of their property value, up from 28 percent a decade ago. Hamptons notes that some mortgage lenders become reluctant to lend above this threshold.
Flats with a service charge at or below 1 percent of their value were 50 percent more likely to sell in 2025 than those with charges of 2 percent or more. This creates a liquidity problem for landlords looking to exit the market.
This follows LK’s previous reporting on leasehold rules driving landlords away from flats, where research warned that ownership complexities were making houses more attractive investments. The latest service charge data adds another financial reason for landlords to favour freehold properties.
Regional variation remains significant. Around 30 percent of flats in the North East still have service charges under £100 a month, followed by 28 percent in both the East Midlands and the South West. However, these lower-cost areas often offer lower rental yields, limiting the advantage.
What this means for landlords
- If you own leasehold flats: Review your service charge trajectory and factor expected increases into yield calculations – a 4-5 percent annual rise appears to be the new normal.
- Watch for: Major works bills on blocks over 25 years old, where roof, lift and window replacements could trigger substantial one-off demands.
- Bottom line: High service charges reduce sale appeal and can restrict lending options, so build exit timing into your investment planning.
Editor’s view
The £200 monthly milestone matters more than it sounds. For a two-bedroom flat generating £1,200 in rent, service charges now consume nearly 17 percent of gross income before mortgage, insurance or maintenance. With charges rising faster than rents in many areas, the arithmetic is turning against flat landlords – particularly in London where the gap is widest.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 2 March 2026
Sources: Hamptons
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