Housing Minister Matthew Pennycook (main picture) has ruled out a cap on leasehold service charges despite recent figures showing the average is now above £2,000 per year.

He told MPs a ceiling on service charges would prevent funds being raised for legitimate reasons, and the Government could not prevent that.

Considerable strain

“The government recognise the considerable financial strain that rising services charges are placing on leaseholders.

“By law, variable service charges must be reasonable. Should leaseholders wish to contest the reasonableness of their service charges they may make an application to the appropriate tribunal,” he said.

“The government has no plans to cap service charges for tenants and leaseholders given this would prevent necessary funds being raised for legitimate purposes when necessary.”

11% increase

In February, Hamptons said the average annual service charge for a flat during 2024 increased by 11% to £2,300 or £192 a month.

This compared with 2023 when they increased by 4.3%, and meant the average service charge in England was above £2,000.

Last month, the Government promised to completely overhaul the leasehold system including a ban on new leasehold flats.

Abolish ground rent

A Commonhold White Paper contains pledges to allow homeowners to take a stake in their buildings from day one and abolish ground rent.

The plans build on The Leasehold and Freehold Reform Act 2024, which was one of the only laws that made it through at the last minute under the Conservative government before the General Election was called.

Challenge

Pennycook said the act makes it easier for leaseholders to challenge unreasonable service charge increases.

“The government is committed to acting quickly to implement the provisions of the Act,” he said.

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