Inflation of goods and services has pushed up service charge costs for leaseholders across England & Wales the latest annual service charge index from Hamptons has revealed.

The index shows that the average flat service charge increased by 8.4%, or £175 a year, between Q1 2023 and Q1 2024, which was more than twice the rate of inflation and marked the fastest rate of annual growth since the company’s records began in 2016.

At the end of Q1 2024, the average service charge on a flat stood at £2,247 per annum, 31% higher than in Q1 2019. Service charges are typically set on estimated costs, so when inflation pushes costs upwards, the impact on service charges tends to be delayed.

By the end of Q1 2024, 19% of flats had a service charge below £1,000 per year, a figure which has fallen annually from 33% in 2016. In London, just 14% of flats have an annual service charge below £1,000. Based on their current trajectory, there are unlikely to be any flats offering a sub £1,000 per year service charge within a decade, says Hamptons.

The service charge for a one-bed flat in England and Wales averaged £1,940 at the end of Q1 2024, with 75% of leaseholders paying more than £1,000 per annum. Meanwhile, the average service charge for a two-bed was £2,311 with 84% paying more than £1,000 a year. And the average three-bed stood at £3,044, the first time the annual charge has crossed the £3,000 mark. 89% of three-bed leaseholders are paying more than £1,000 per year.