Service Charges are rising but why?
Oversight exists, but it rarely addresses cost
The Regulator of Social Housing can intervene when an organisation fails on consumer standards or governance. The Housing Ombudsman can help residents who feel they have been treated unfairly. Yet service charge inflation rarely results in significant regulatory action. Much of the guidance remains voluntary, and most of the accountability still sits with residents who already feel overwhelmed.
Without a more structured approach to cost planning and enforcement, service charges will continue to move in ways that feel out of sync with both wages and inflation.
When housing associations merge, accountability often resets
A quieter but very real issue sits behind many of today’s service charge pressures. When a housing association becomes financially unstable, its stock is usually taken over by a larger provider. This is meant to protect residents, and in some cases it does. But historic maintenance gaps, underfunded reserves and confused service charge structures often transfer without review.
Residents end up with a new landlord, but not necessarily a new start. The long running issues that contributed to the financial strain are rarely addressed. Instead, they move into a larger organisation where the same pressures begin to build again.
The real driver of service charge volatility: delayed asset replacement
A significant share of service charge escalation can be traced back to the habit of pushing assets well beyond their planned service life. When a lift, boiler or water system reaches the end of its lifecycle, failure is no longer a possibility. It is inevitable. And once failure occurs, the building has no choice but to react quickly.
This is where the costs mount. Emergency replacement work carries higher labour and procurement costs. Buildings often need to hire temporary equipment such as mobile boilers, external lifts or temporary chillers while new systems are sourced and installed. These temporary measures can cost thousands every week. Residents feel the impact immediately through higher service charges.
These events are not surprises. They are the natural result of delays in planned maintenance and replacement.
Insurance and the Building Safety Act were always going to evolve
There is also growing frustration around the cost of insurance and the burden of complying with the Building Safety Act. Many people ask why residents are being asked to cover these increases.
The reality is that buildings do not remain static. Standards evolve. Fire safety requirements change. Systems age and require adaptation. If a car needs a warrant of fitness every year just to stay on the road, it should not surprise anyone that a complex building needs regular checks, certification and occasional upgrades.
These changes should be part of the long term financial model from the start. Instead, they often appear as sudden service charge increases many years into a building’s life. That creates the perception of unfairness, even when the work itself is necessary.
RICS sets strong expectations, but they are not universal
RICS has long provided clear standards for service charge management. In commercial property, compliance is mandatory for regulated firms. Budgets must be transparent. Accounts must be properly reconciled. Costs must be shared fairly.
The residential code sets out similar expectations for long leaseholders. It encourages clear communication, proper budgeting and long term planning. However, in the residential sector many of these expectations remain advisory rather than enforceable. Without consistent adoption, residents experience significant variation in the quality and clarity of service charge management.
A building is a changing asset, not a static one
At the centre of this issue is a misconception that continues to influence how many organisations plan. Buildings are still treated as if they remain the same over time. Yet every component within them has a defined service life. Lifts, boilers, pumps, electrical systems, facades and fire equipment all deteriorate at predictable rates.
Ignoring this reality creates the illusion of affordability in the early years. It helps keep initial service charges low. But it transfers the true cost into the future, where it becomes more expensive, more reactive and more disruptive.
Short term decisions often lead to long term instability.
What better practice looks like
Improving service charge stability requires long term thinking and consistent planning. The principles themselves are straightforward.
Publish clear annual budgets with day to day costs separated from long term works.
Provide reconciled accounts rather than relying solely on estimates.
Develop realistic ten to twenty year lifecycle plans for each building.
Replace assets on schedule rather than waiting for failure.
Forecast compliance and insurance changes as part of the long term plan.
Apply RICS service charge principles in both residential and commercial settings.
Treat service charge planning as part of asset strategy rather than administration.
This is the type of structured, data led approach that helps residents understand their costs and helps organisations plan responsibly. It also reduces the financial and operational pressures that lead to sudden, unpredictable charges.
Closing thoughts
The Parliamentary debate made one thing clear. Service charges are no longer a niche concern. They are a significant issue affecting affordability, trust and the long term performance of buildings. The 2024 reforms have improved transparency, but the system still lacks the planning and accountability needed to prevent repeated cost shocks.
Buildings age. Standards evolve. Systems fail. These are predictable events. When the industry begins to treat buildings as changing assets rather than fixed products, service charges will become more stable, more understandable and ultimately more fair.
To learn more about how a data led approach to lifecycle planning and building performance can support your organisation, contact us at admin@toluconsulting.co.uk
