Service charge transparency is coming: inside the 2025 consultation

In July 2025 the government published a consultation with the measured title "Strengthening leaseholder protections over charges and services." Beneath that title sat a set of proposals that, if enacted, would represent the most significant shift in service charge transparency for a generation. The consultation closed on 26 September 2025. Responses are being analysed.

This article walks through what was proposed, what it would mean for leaseholders and self-managing blocks, and how to read the uncertainty: these are proposals, not law.

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Why this consultation matters

Service charges are one of the defining grievances of the English and Welsh leasehold system. Leaseholders often receive demands for substantial sums — sometimes hundreds or thousands of pounds at short notice — with minimal explanation. They pay for services they may not have chosen, provided to a standard they cannot easily challenge, procured through processes they cannot scrutinise.

The legal architecture does offer some protections. Service charges must be reasonably incurred under the Landlord and Tenant Act 1985. Major works above certain thresholds require a Section 20 consultation. Accounts can be demanded and inspected. Charges can be challenged at the First-tier Tribunal.

But the system places the burden almost entirely on the leaseholder to know their rights, to ask the right questions, and to bring proceedings if needed. Most people do not. The result is that poor practice — unexplained markups, late accounts, inadequate consultation, inflated management fees — persists in many blocks simply because challenging it is too difficult.

The consultation responds to this by proposing a set of structural changes to information rights and process requirements. The aim is to make transparency the default, rather than a prize leaseholders must fight for.

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What was proposed

A standardised service charge demand format

The consultation proposed requiring service charge demands to follow a standard format, making the components of each demand clear and comparable across buildings and managing agents.

At the moment, demands vary enormously: some are detailed and easy to read; others are single-line invoices with no supporting information. Standardisation would make it easier for leaseholders to understand what they are paying for, to compare year-on-year, and to spot anomalies. It would also help residents of self-managing blocks produce professionally formatted demands as a matter of course.

A required annual report to leaseholders

The consultation proposed making it mandatory to provide an annual report to leaseholders covering the key aspects of the management of their building — a summary of expenditure against budget, details of reserves, upcoming works, and insurance information.

Many good managing agents and well-run self-managing companies already produce something like this voluntarily. The proposal would make it a baseline expectation for everyone.

Raising the Section 20 thresholds

Section 20 of the Landlord and Tenant Act 1985 requires formal consultation with leaseholders before carrying out qualifying works or entering qualifying long-term agreements. The current thresholds — more than £250 per leaseholder for major works, more than £100 per leaseholder per year for long-term agreements — have not been updated in years and have been criticised as too low: they pull a large number of routine contracts and repairs into a process designed for genuinely significant expenditure.

The consultation proposed raising the major works threshold from £250 to £600 per leaseholder, and the long-term agreement threshold from £100 to £300 per leaseholder per year.

This is significant. If the higher thresholds were enacted, many routine maintenance contracts and small repair jobs that currently require a full Section 20 consultation would fall outside the formal process. For a self-managing RTM company, this would reduce the administrative burden of the Section 20 regime for routine matters, while still preserving the full process for genuinely substantial expenditure.

The trade-off is worth acknowledging: the existing thresholds, low as they are, give leaseholders more opportunities to scrutinise expenditure. Raising them reduces that scrutiny on smaller items. Whether the reduction in bureaucracy for legitimate spend is worth the reduced oversight is exactly the kind of policy question a consultation is designed to explore.

A standard schedule for administration charges

Administration charges — fees for processing assignments, consents, certificates, and similar requests — have been another source of complaints. Amounts are not always predictable, and leaseholders selling or remortgaging can face demands that seem disproportionate.

The consultation proposed standardising these charges, making them predictable and capped. The detail of how this would work in practice was part of what respondents were invited to comment on.

Stronger rights to information

The consultation included proposals to strengthen and streamline leaseholders' rights to obtain information about the management of their building — including the management agreement itself, insurance details, and contractor procurement records.

These proposals build on existing rights under the Landlord and Tenant Act 1985 but would make access clearer, faster, and less dependent on knowing which statutory provision to invoke.

Litigation cost reform

One of the most controversial aspects of the current system is the way the cost of litigation between freeholders and leaseholders can fall on the leaseholders themselves. Where a freeholder takes a leaseholder to the First-tier Tribunal — or defends a leaseholder's application — those legal costs can in some cases be recovered through the service charge, meaning leaseholders collectively pay the freeholder's solicitor's bill via their own service charge.

The consultation proposed reforming this so that leaseholders are no longer automatically billed for the freeholder's legal costs through the service charge. This was one of the more widely welcomed proposals among leaseholder groups.

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What these proposals would mean for self-managing blocks

For RTM companies and RMCs, many of these proposals work in the same direction as good practice already. A self-managing block with competent directors should be producing budgets, demanding service charges with clear explanations, holding reserve funds transparently, and communicating with residents about upcoming works. The proposed annual report requirement is simply a formalisation of what engaged residents should expect to receive as a matter of course.

The Section 20 threshold change would be genuinely operationally significant. At the current £250 threshold, even a modest shared contract — a window cleaning round, a garden maintenance agreement — can trigger the formal consultation process if there are few flats in the block. Raising the threshold to £600 would free self-managing directors from running formal consultations on genuinely routine expenditure while preserving the rigour of the process for substantial works.

The litigation cost reform matters most in the managed sector (where leaseholders face freeholders), but for mixed buildings where the RTM company and the freeholder have distinct interests, the principle is also relevant.

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How to read the uncertainty

It is important to be clear: none of these proposals are law. The consultation closed in September 2025. The government is analysing responses. There will be further steps — potentially further consultation, primary legislation, commencement regulations — before any changes take effect.

The history of leasehold reform in England is one of slow, piecemeal change, with reforms frequently delayed or narrowed in Parliament. The Leasehold and Freehold Reform Act 2024 itself, which received Royal Assent in May 2024, still has significant provisions not yet in force.

That said, the direction of travel is clear and has been consistent across successive governments. Transparency is coming. Standardised demands and annual reporting requirements represent a minimal ask relative to what most commercial property tenants already receive as a matter of course. It would be surprising if nothing from this consultation package became law within the next few years.

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The broader context

This consultation sits alongside two other significant developments:

Managing-agent regulation. A separate consultation on strengthening the regulation of managing agents (including mandatory professional qualifications and a code of practice) also closed on 26 September 2025. The two consultations are complementary: better-regulated agents and better-informed leaseholders address the same root problem from different directions.

The draft Commonhold and Leasehold Reform Bill. Published 27 January 2026 and currently in pre-legislative scrutiny, this draft Bill addresses a wider range of leasehold issues and represents the longer-term direction for the tenure — including the prospect of commonhold as the default for new flats. A separate article covers this in detail.

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FAQ

Do I need to do anything differently now, before the proposals become law? No. The proposals are not yet in force. You should continue to operate under the current legal framework. That said, running your block to the standard the proposals describe — clear demands, annual reports, transparent accounts — is good practice regardless of what the law ultimately requires.

Will the Section 20 threshold change apply to works already underway? Any change in threshold would apply from the commencement date of the relevant legislation or regulations — it would not typically affect consultations or contracts already entered into before that date. The details would be in the commencement provisions.

What can I do now if my managing agent isn't being transparent? You have statutory rights to demand a written summary of service charge costs and to inspect supporting documents, under the Landlord and Tenant Act 1985. If the agent refuses to provide information, the First-tier Tribunal can intervene. And if the broader transparency problem persists, RTM is the structural solution: take over management and control the information yourselves.

Will the litigation cost reform help me if I'm in a dispute with my freeholder right now? Not yet — the proposal is not law. For current disputes, you should take legal advice. LEASE offers free guidance and can help you understand your rights under the existing framework.

Where can I find out when these proposals become law? GOV.UK publishes all new legislation and associated commencement orders. The Leasehold Advisory Service (LEASE) also publishes updates when significant changes take effect. Watch both sources.