Service charges on property rising significantly
By |Published On: 9th March 2016|

Home » Uncategorised » Service charges on property rising significantly

Service charges on property rising significantly

By |Published On: 9th March 2016|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

A new investigation by insurance provider Direct Line for Business has indicated that property service charges are rising at a significant rate.

According to the survey, 33% of management companies increased their fees during the last two years.


The average service charge or fee leaseholders pay to cover their share of overall building maintenance currently stands at £1,863. This alone represents more than two months of the typical income received by the average buy-to-let landlord, which at present is £906.

In addition, there are other fees to consider. These include tax on those costs, management and agent fees, mortgage payments and any ground rent fees, which currently total £371 per year for a new build. This rises slightly to £327 for a property built pre-2016.

Service charges for new build properties are substantially greater than for older homes, with the typical fee £2,777. This is a whopping 96% higher than the average for an older property. What’s more, service charge levels alter significantly between developments.

Service charges on property rising significantly

Service charges on property rising significantly


Increasingly, the trend is growing for new build properties to include amenities including libraries, 24 hour concierge services, gyms and cinemas. In turn, service charges are rising as result, but this also offers added value for landlords looking to purchase these types of property.

Recently, developers have seen an increase in private stock which has been owned by freeholders subject to service charges. Owners of freehold properties located on private roads or estates are being charged for general upkeep of roads and gardens. One example is shown by owners of four-bedroom properties situated on a development in Guildford being charged £900 per year for the upkeep of their roads and communal gardens.

The way of calculating service charges also varies between the type of developments. Sometimes, it is a flat rate for all home. In other cases, charges are worked out by the number of bedrooms or the square footage of a property.


Nick Breton, Head of Direct Line for Business, notes, ‘service charges are often a hidden cost, which should be factored in when considering the affordability of a property. In some cases service charges are uncapped and can escalate rapidly. Landlords need to take into account all associated costs when purchasing a property, such as service charges, ground rent and taxes that may impact their rental yield.’[1]




About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

Share this article:

Related Posts


Looking for suitable
insurance for your
Check out our four
covers for landlords