The service charges for new-build flats coming on to the market this year are on average 96 per cent higher than comparable charges for older buildings according to research commissioned by the insurer Direct Line for Business.
It says this year’s average service charge - based on a survey of over 100 developments across the UK - is £2,777, which is some 96 per cent higher than the average for an older property.
It says one new build development coming onto the market in Croydon this year will see home owners paying £1.55 per square foot in service charges, while a development in Lambeth coming onto the market in 2017 is charging four and a half times more at £7 per square foot.
It says some of the spike is down to the increasing trend for new builds to include amenities such as libraries, 24 hour concierge services, gyms and cinema rooms.
“Recent moves by developers have seen more private housing stock owned by freeholders subject to service charges. Owners of freehold properties situated on private roads or private estates are being charged for upkeep of roads and gardens. In one example owners of every four-bedroom property situated on a development in Guildford are charged £900 a year for upkeep of the road and communal gardens” says the research.
The research also claims that a third of property management companies have increased service charges in the past two year.
The average service charge or fees leaseholders pay to cover their share of the overall building maintenance, now stands at £1,863. This cost alone represents more than two months of the average monthly rental income received by landlords, which stands at £906 according to data provided to Direct Line for Business from Countrywide.