Soaring service charge costs for new London leaseholders should be capped

The Mayor of London should commit to capping service charges for new shared-ownership homes to help Londoners facing soaring costs associated with leasehold.

London is particularly affected by the increasing costs associated with leasehold, as over a third (36.1 per cent) of the capital’s homes are leasehold, compared to only 16 per cent in the rest of England.

A London Assembly Housing Committee report published today, “Worry and stress” – life as a leaseholder in London, also calls for the Mayor to include “designing down service charges” as part of his updated London Plan, due to be published next year.

A Committee survey to uncover the scale of the issues facing the capital’s leaseholders found:

• Respondents were spending a median average of £3,912 per year (£326 per month) on their service charge, with one in 10 (11%) spending over £7,000 per year^[1]
• Reports of poor transparency about charges, works done poorly or not at all, or charges seen as fraudulent and price-gouging
• Affordability of shared ownership is being called into question because of uncapped service charges. Funded by the Mayor as an affordable housing option, shared ownership is no longer affordable to many.

Key recommendations in the report include:

• The Mayor should work to improve transparency in leasehold service charges in London. This should include updating the Leasehold Guide for Londoners and the Service Charges Charter.
• The Government should legislate to give social renters the same rights as leaseholders in terms of access to full service-charge statements and invoices.
• Developers should be required to submit to their local authorities steps they have taken to ensure maximum lifespan of building components and maximise whole-life value for money for leaseholders.
• The GLA should conduct research on potential models for capping service charges in its new-build shared ownership.

Former Chair of the London Assembly Housing Committee, Sem Moema AM, said:

“Londoners are being hit hard by increasing service charges, often with no clear idea of what they are receiving in return for their money.

“Worse still, there is no end in sight for these soaring costs, with freeholders and housing associations telling us that service charges are expected to increase further.

“Leaseholders deserve transparency about their costs, but they also need action to bring their expenses down.

“We are calling on the Mayor to do his part, by capping service charges on new shared ownership homes and committing to drive down service charges through his new London Plan.”