New research from The Property Institute (TPI) sheds light on the factors driving service charge increases across the UK's leasehold sector. TPI's 2026 Service Charge Index, which includes data from FirstPort and 12 other managing agents, covers more than 117,000 homes across England, Scotland and Wales.
What the data shows
Service charges have risen by 5.8% since 2024 — marginally below the 6.1% rate of inflation over the same period. But the headline figure only tells part of the story. Costs vary considerably depending on the size, age and complexity of a building. Leaseholders in taller buildings over 18 metres face average annual bills of £4,447, compared with £2,418 for those in low-rise developments, with older buildings attracting higher costs still.
What is driving the increases
Two factors stand out. Reserve fund contributions have grown by 26% over the past two years and now account for around a sixth of total budgeted spend. While this represents an increase in costs, it also means leaseholders are better protected against unexpected expenditure and large-scale works — a positive development for long-term financial planning.
Building safety compliance is the other significant contributor. Costs associated with the Building Safety Act have risen by 53% since 2025, reflecting the increased requirements placed on managing agents for higher-risk buildings.
What this means in practice
Mairead McErlean, Head of Legal, Compliance and Regulatory Affairs at The FirstPort Group, explains:
“TPI’s findings highlight the complexity of managing residential buildings and the wide variation in service charge costs across the sector. Factors such as a building’s size, height, age and specification all play a significant role, meaning there is no single benchmark that reflects the experience of every leaseholder.
“Property managers are working within an evolving regulatory environment, particularly for higher-risk buildings, where there are additional safety requirements.
Carrying out behind-the-scenes measures, from fire and building safety assessments to inspections and reporting, are essential to maintaining safe and compliant buildings – but with the consequence of increased costs for leaseholders.”
The full Service Charge Index 2026 can be read via the TPI website.
