Freehold Service Charge Disputes

Shilpa Mathuradas

Service Charges and the Leasehold and Freehold Reform Act 2024

The Leasehold and Freehold Reform Act 2024 received Royal Assent on 24 May 2024 but most of its main reforms are not yet in force. Several provisions, including the prescribed rates used in the lease-extension valuation calculation, still need to be brought into force by regulations, and parts of the enfranchisement scheme require further legislation first. The Act delivers a substantial overhaul of leasehold law, including the service charge transparency reforms covered below.

Whilst a key part of the Bill relates to lease extensions and the Right to Manage, this article focuses on the Bill’s provisions relating to service charges.

What are service charges?

Service charges are payments made by the tenant to their landlord for the costs incurred in providing services in relation to a property, such as for general maintenance or repairs. The way in which a service charge is worked out is usually set out in the Lease and landlords should make accounts available to the tenant which comprises the annual service charge.

Service charges is a big area of dispute we see at Osbornes between leaseholders and their landlords, including the following issues:

1. Overcharging by the landlord or the management company for services, maintenance or administration;
2. Undercharging over a period of time which then results in a huge deficit and a disproportionate call for funds from the leaseholders;
3. Lack of evidence or documentation, or a refusal to provide documentation, to back up a service charge;
4. Poor quality maintenance or repairs being carried out;
5. Unresponsive/absent landlords or management companies not complying with the Lease provisions or letting the building go into disrepair.
6. The landlord’s failure to adequately insure the property in accordance with the Lease provisions which result in loss to the leaseholder;
7. Allegation of historic neglect, in other words where a leaseholder may be seeking to argue set off against any demand for service charges because the costs of remedying the defect could have been avoided if the property had been properly maintained or repaired earlier, when the landlord was obliged to do so.

Increased transparency of service charges under the 2024 Act

The 2024 Act increases the transparency of service charges in three significant ways.

First, landlords and managing agents have to provide standardised service charge documents to leaseholders, so that the breakdown of costs and how they have been calculated is clear and comparable. Leaseholders have a clearer view of what they are paying for, and a better basis on which to assess whether the charges are reasonable.

Second, variable service charges must be reasonably incurred and can be challenged at the First-tier Tribunal (Property Chamber). The 2024 Act did not extend this challenge right to fixed service charges. Variable service charges remain subject to the reasonableness test under section 19 of the Landlord and Tenant Act 1985.

Third, the Royal Institution of Chartered Surveyors has issued a Service Charge Residential Management Code setting standards for the management of residential blocks. These professional-standards reforms are intended to raise the baseline quality of management across the sector.

What is proposed next: estate rentcharge enforcement reform

The draft Commonhold and Leasehold Reform Bill, published on 27 January 2026, proposes further changes that are particularly relevant to freeholders on private estates. The Bill would repeal sections 121 and 122 of the Law of Property Act 1925, which currently give rentcharge owners very broad enforcement powers. Rentcharge owners would be required to give notice before commencing enforcement action for arrears. None of these proposals are in force yet, and the Bill is in pre-legislative scrutiny and consultation between 27 January and 24 April 2026.

Need Help with a Service Charge Dispute?

Disputes over service charges can be complicated and frustrating. At Osbornes, we can advise both landlords and tenants on service charges dispute, including representation at the First-Tier Tribunal if required.

Please do not hesitate to contact our property litigation team on 0207 485 8811 for expert legal advice.