More than three million leaseholders in England will gain new powers to challenge service charges under government reforms, but property lawyers warn the changes will not necessarily lead to lower bills. The measures, announced by housing minister Matthew Pennycook, take effect in stages from 1 April 2027.
New rights for leaseholders
From 1 April 2027, flat owners will have stronger rights to demand information about service charges and 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.
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."
Lawyers question impact on 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."
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.
New duties for landlords and agents
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, though 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, alongside 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 a bigger worry than ground rent
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, compared 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 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.
Arron Curtis of Save My Service Charge (SMSC) questioned whether greater disclosure alone would improve building management. "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.
Advice against delaying lease extensions
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, but key changes to lease extension valuations under the Leasehold and Freehold Reform Act 2024, including plans to abolish marriage value, still lack a confirmed start date.
"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, and those with short leases may 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.
Implementation timetable
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, with private landlords facing 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 remains whether those changes will translate into fairer charges and better building management.
