What is Service Charge (Leasehold)?

A leasehold service charge is the variable annual sum leaseholders pay to the freeholder or managing agent to cover the cost of maintaining and insuring the building and its communal areas. Under the Landlord and Tenant Act 1985, service charges must be reasonable, and leaseholders may challenge unreasonable charges at the First-tier Tribunal (Property Chamber). Landlords must consult leaseholders before committing to major works costing more than £250 per leaseholder (the Section 20 consultation process). Managing agents and freeholders must provide an annual summary of costs with the service charge demand, along with a summary of leaseholders' rights.