London Assembly report calls on Khan to look at capping service charges

Leaseholders in London are spending nearly £4,000 a year (£3,912) on service charges, according to a new report by the London Assembly Housing Committee.

The report, titled Worry and stress, life as a leaseholder in London, highlights the costs associated with leaseholds in London and calls on London Mayor Sadiq Khan and the Greater London Authority (GLA) to conduct research on models for capping service charges in its new-build shared ownership developments.

It also recommends that housing 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”.  

In its executive summary, the report blames developers for sacrificing quality, stating: “At the moment, where developments are built with poor-quality components, leaseholders and social tenants can end up footing the bill for expensive maintenance and repairs. This is not fair.”

The report, based on a survey of 900 Londoners (798 of whom were leaseholders, with the remainder either freeholders or tenants), suggests “current practice on service charges can undermine the very point of shared ownership – that it be an affordable housing product.”

It points out that there are more leasehold homes in the capital than anywhere else in the country, with more than a third (36%), compared to only 16% in the rest of England.

The committee recommends that by the end of 2025, the GLA should amend the Service Charges Charter to state that investment partners should track affordability of shared ownership at specific intervals, such as years one, five, and 10.

>>See also: Are housing associations really overcharging residents?

It also recommends that the GLA work with housing providers to ensure that they have “transparent, accessible policies for supporting shared owners whose housing costs have increased over 40% of net household income”.

The authors recommend that research on models for capping service charges for new-build shared ownership should be completed by the end of 2025, and therefore be able to feed into shared ownership starts in the next iteration of the Affordable Homes Programme.

It also recommends the GLA collect data on affordability of shared ownership over time and use this to inform the next iteration of the product in the coming Affordable Homes Programme.

Sem Moema AM, chair of the housing committee, said: “A truly affordable housing system isn’t just about the price of a home—it’s about the total cost of living in it. That means tackling excessive and unclear service charges head-on, and ensuring transparency, accountability, and fairness are built into the system from the outset.”

Among its other recommendations are updating the Leasehold Guide for Londoners and the Service Charge Charter and that the government should legislate to give social renters the same rights as leaseholders in terms of access to full service-charge statements and invoices.

Housing associations have rebutted claims in recent months that they overcharge. 

Rhys Moore, executive director of public impact at the National Housing Federation, earlier this year told Housing Today that charges can “only cover the actual costs of work that has been carried out and services provided for a building”

“In each of the last five years the general trend across the sector has been to undercharge on service charges,” he said.

According to the Regulator of Social Housing’s 2024 Global Account of private registered providers, service charges to tenants increased increased by £300m (16%) to £2bn in 2024.

However, registered providers’ expenditure on chargeable services increased by the same amount, but from a higher base, coming to stand at £2.6bn. Based on these figures, the sector is effectively subsidising service charge costs to the tune of £600m.

A spokesperson for the Mayor of London said: “The Mayor has long called for an end the feudal leasehold system and he supports the government’s plans to scrap leasehold on new build flats and to introduce commonhold as the default tenure. Fixing the housing crisis, which is hitting young Londoners and potential homeowners particularly hard, is one of his top priorities, and he has consistently stood up for leaseholders including by introducing the Service Charges Charter.

”He will continue to work with the government, councils and others to support leaseholders and build the genuinely affordable homes Londoners desperately need and deserve.”