More than three million leaseholders will gain new powers to challenge service charges, but property lawyers warn that the government’s reforms will not necessarily lead to lower bills.
From 1 April 2027, flat owners in England will have stronger rights to demand information about service charges. They will also gain greater protection against paying landlords’ legal costs when disputes arise.
Further changes from November 2027 will tighten rules on insurance fees, billing and financial reporting.
Housing minister Matthew Pennycook said: “Rapidly escalating and frequently opaque service charges are placing huge financial strain on hard-pressed leaseholders across the country.”
He added: “Today, we’re acting to protect them by introducing regulations that will improve the fairness and transparency of service charges so that unreasonable increases can be more easily challenged.”
The measures form part of the government’s wider leasehold reforms. However, industry experts have questioned whether greater transparency will tackle the underlying cost of managing buildings.
Lawyers warn reforms will not cut underlying costs
Jo Ironside, partner at Mayo Wynne Baxter, questioned whether the changes would deliver the benefits ministers have promised.
“Leaseholders are tired of hearing ministers congratulate themselves on supposedly radical reforms when, in reality, much of the legislation introduced in recent years has changed very little on the ground,” she said.
Ironside argued that rising insurance premiums, contractor costs and building safety requirements remain the main drivers of higher service charges.
“Replacing leasehold with commonhold does not make insurance, maintenance, building safety obligations or management costs disappear,” she said.
“Commonhold is increasingly being marketed as the property law equivalent of a miracle cure. It is not.”
She also warned that commonhold could leave residents making complex decisions about repairs, insurance and building management.
Jonathan Turner, partner and head of residential conveyancing at Morr & Co, welcomed the greater transparency but described the government’s approach as gradual reform.
He said landlords, leaseholders and their advisers would need to keep pace with the changes.
Managing agents face tougher requirements
Mark Chick, partner at Bishop & Sewell and director of the Association of Leasehold Enfranchisement Practitioners (ALEP), welcomed the reforms but warned of significant new duties for landlords and managing agents.
The changes will restrict landlords’ ability to recover legal costs from leaseholders who challenge service charges.
However, landlords will still be able to seek tribunal approval to recover those costs.
“Landlords must now seek the permission of the First Tier Tribunal (FTT) to add litigation costs to future service charges,” Chick explained.
From November 2027, private landlords will face further rules on service charge demands, accounts and annual reports.
The reforms will also introduce stronger controls over insurance-related fees.
“Combined, these changes create considerable additional compliance obligations,” Chick said.
He added: “Good landlords have been preparing for these changes for many months and many already provide this information. They welcome these changes. Those that do not, now need to act.”
Chick also backed proposals to regulate property agents, including managing agents.
Service charges worry leaseholders more than ground rents
Research commissioned by Justice for Property Rights (J4PR) suggests service charges are a greater financial concern for many leaseholders than ground rents.
Its Censuswide survey of 2,000 UK residential leaseholders found that 38.5% identified service charges as their most unexpectedly increased cost.
That compares with 25.5% who cited ground rent.
Meanwhile, 31.5% named unexpected service charge increases among their main concerns, against 20.7% who highlighted ground rent payments.
The survey also found that 88% did not describe their ground rent as unaffordable.
Richard Merrin, head of campaigning at J4PR, welcomed the government’s announcement.
“The Government is listening to leaseholders, and that is something we welcome,” he said.
He argued that service charges, insurance costs and poor transparency over building management were among the main pressures facing flat owners.
Will greater transparency deliver better value?
Arron Curtis of Save My Service Charge (SMSC) questioned whether greater disclosure alone would improve building management.
He welcomed the reforms but warned that the industry could focus too heavily on explaining charges rather than improving performance.
“Leaseholders don’t simply want to know why their charges are increasing. They want to know whether their buildings are being properly managed and whether they are receiving value for money,” Curtis said.
The comments highlight a key issue for managing agents: clearer accounts may make costs easier to challenge, but they will not automatically reduce the cost of maintaining buildings.
Flat owners warned against waiting for wider reforms
Meanwhile, Matthew Price, associate director at Peter Barry Surveyors, warned leaseholders against delaying lease extensions in anticipation of further reforms.
The government plans to introduce its Commonhold and Leasehold Reform Bill before Christmas.
However, key changes to lease extension valuations under the Leasehold and Freehold Reform Act 2024 still lack a confirmed start date.
These include plans to abolish marriage value.
“Reform is coming, and for many leaseholders it will be good news. But ‘coming’ isn’t the same as ‘here’,” Price said.
He warned that owners with leases approaching or below 80 years could face higher extension costs if they delay.
Those with short leases may also find it harder to sell or remortgage.
Price stressed that waiting could still make sense for some owners with long leases and modest ground rents.
When will the new rules take effect?
The government plans to introduce the changes in stages, subject to parliamentary approval.
From 1 April 2027, leaseholders will gain stronger rights to request service charge information and challenge landlords’ legal costs.
From 1 November 2027, further rules will cover insurance costs, administration fees and clearer service charge reporting. Private landlords will also face new accounting and billing requirements.
Councils and housing associations will have until 1 November 2028 to introduce the additional standardised reporting measures.
For managing agents and landlords, the timetable means changes to billing systems, financial records and disclosure procedures.
For leaseholders, the question is whether those changes will translate into fairer charges and better building management.
