In response to concerns about rising service charge bills for some time, The Property Institute (TPI) has investigated the drivers behind rising service charge bills. They have launched a TPI Service Charge Index and Report, which will be repeated annually, to provide average data on service charge expenditure thereby offering analysis into the trends and factors causing rising bills.
In their inaugural report, the TPI found, on average, service charge bills have increased 41% since 2019 (cumulative inflation over the same period has been 23%). The causes of this increase include:
- 92% increase in building’s insurance
- 73% increase in utilities
- 69% increase in professional fees (excluding property management fees)
- 40% increase in general Health and Safety costs
- 36% increase in repairs and maintenance
- 34% increase in contributions to the reserve fund
- 21% increase in property management fees (a below inflationary increase)
As a result of these increases, in 2024, the TPI reported the average charge cost per leaseholder was £3,634 per annum (based on the 13,754 units in their index).
In addition to repairs and maintenance, insurance and energy, this year leaseholders are having to contend with the costs of implementing the new building safety regime, which was brought in by the Building Safety Act 2022. Depending on the complexity and age (and other factors), the cost of implementation can vary hugely.
