How We Actually Save Service Charge Money for Leaseholders

An open letter to politicians, journalists, and anyone who genuinely wants to help flat owners in the UK

It’s time to make a real difference — in real numbers — to leaseholders’ bank balances.

But first, let’s clear the air.

There’s too much noise. Too many myths. Too many well-meaning but ultimately misleading soundbites — many of them coming from the highest levels of government and echoed uncritically by the press.

Yes — leaseholders are paying more than they should.
Yes — some of the reasons are systemic, historic, and even scandalous.
But the solutions being championed most loudly won’t fix the root problem — not if the goal is to genuinely bring down service charge costs.

I’ll explain why.

 Why Leaseholders Are Paying Too Much

The scope of leaseholder liability has spread far and wide in recent years. While some cost increases are out of everyone’s control (inflation, compliance, and safety legislation), others stem from poor management, bad actors, or just a broken system.

We’ve all heard the horror stories: cowboy agents, malpractice, lack of regulation.

Managing agents have never been loved. But today, the reputation of the sector is arguably at an all-time low.

That’s a problem — and not just a PR one. Because the good agents doing things properly are still lumped in with the bad.

Planned or Current Interventions — And Why They Don’t Save Leaseholders Money

Let’s look at the most commonly discussed reforms — and where they fall short in the real world:

1. Regulation of Managing Agents

We at JFM are 100% behind this. We’ve long supported better qualification frameworks via The Property Institute (TPI) and RICS.

But here’s the truth:

Regulation will improve quality, not cut costs.

Management fees will likely go up to fund compliance. The barrier for entry will rise. And while the service may improve — you won’t see smaller service charge bills just from regulating agents.

2. The Commonhold Cost-Saving Myth

Yes — giving leaseholders more control is positive.

Yes — we work with countless Resident Management Companies (RMCs), RTMs, and Freehold-owning leaseholders who’ve run buildings well.

In fact, in many cases RMCs and RTMs do a brilliant job of representing their communities.

But there is no data to support the idea that dwelling-holder management saves money overall. In fact, TPI’s Service Charge Index shows virtually no difference between current leaseholder-led and landlord-led developments in terms of costs. Empowerment is good. People having a say over how their money is spent in a democratic forum can yield very positive results.

But please can we not mislead the consumer. Commonhold will create more RMC/RTM-style developments. But with a difference — the dwelling holders may end up needing more professional advice as they seek to navigate brand new legislation.

If anything, we predict Commonhold will raise service charges slightly for this reason.

3. Building Safety Interventions

The Building Safety Act and associated regulations, well-intentioned as they may be, have brought an avalanche of cost — with many leaseholders now bearing thousands of pounds in new compliance obligations.

Early government estimates on costs were way off.

Today, leaseholders are paying for:

• • Fire door upgrades
  • Intrusive surveys
  • Mandatory inspections
  • Safety case reports

And managing agents and directors face criminal liability if they don’t comply.

None of this saves leaseholders money. Quite the opposite.

So What Will Save Money?

Here are five practical, impactful steps the government, the industry, and the media should be championing right now:

1. Scrap the VAT Burden on Site Staff

In 2018, HMRC “clarified” its guidance on the VAT treatment of concierge and onsite staff.

In many cases it’s simply not feasible for anybody other than the managing agent to employ site staff — even if funding to pay those salaries is borne by the leaseholders directly.

The result? If a managing agent (rather than a freeholder or RMC) employs the staff, a full 20% VAT charge is now levied — paid by leaseholders.

For large sites with big teams, this amounts to tens of thousands of pounds in additional service charge costs — per year — going straight to the Treasury.

It’s absurd and twists a strange technicality in favour of the government. It’s entirely avoidable.

Revert the policy. Stop charging leaseholders tax on salaries.

2. Properly Fund (and Monitor) the Building Safety Regulator

Right now, leaseholders are being hit with massive bills due to vague, disproportionate interpretations of safety legislation.

Some building safety assessments are reasonable. Others are not.

The cost of unnecessary intrusive surveys — sometimes £100,000+ — is being passed directly to residents.

We urgently need:

• • A clear cost-benefit threshold for safety interventions
  • Proper oversight and appeals mechanisms
  • Independent reviews of high-cost cases

Because “just in case” is not good enough when people are struggling with bills.

3. Give Managing Agents Access Powers to Prevent Insurance Claims

Escape of water is the biggest driver of rising insurance premiums across UK blocks — not fire risk.

And yet, managing agents are legally blocked from proactively addressing many of the causes.

Without access to individual flats, we cannot:

• • Check plumbing
  • Inspect pipework
  • Deal with minor leaks before they become major ones

We need sensible powers for authorised agents to carry out non-invasive, preventative inspections.

This alone could save residents millions across the UK.

4. Regular Retendering

Sounds obvious — but in practice, it’s too often neglected.

Contracts roll on. Prices creep up. And agents must be more disciplined about going back to market.

This doesn’t mean choosing the cheapest provider — but it does mean keeping prices honest.

5. Enforce Proper Reserve Planning and Major Works Cycles

Here’s the hard truth:

Delaying major works makes buildings more expensive to run.

Low service charges are often a mirage. If external repairs are skipped or postponed, structural damage builds up, and future works cost exponentially more.

We need legislation that allows management companies — whether RMCs, freeholders, or Commonhold associations — to override bad leases and put sensible long-term capital plans in place.

This will:

• • Reduce future spikes in service charge bills
  • Improve resale values
  • Prevent emergency funding crises

The Real Fight Isn’t Popular — But It’s Serious

These aren’t headline grabbers. They’re not shiny reforms or political crowd-pleasers.

But they are practical, measurable, and immediately impactful.

I write this not as an apologist for bad practice — but as someone who’s worked on the inside for nearly two decades and cares deeply about improving this sector.

Let’s get past the noise. Let’s focus on what actually puts money back in leaseholders’ pockets.

Because unless we do, service charges will keep climbing.

And leaseholders will continue paying for our failure to fix the real issues.

Thanks for reading.