The New Service Charge Code: What Every Leaseholder Needs to Know

After a decade since the last update, the Royal Institution of Chartered Surveyors (RICS) has published the 4th edition of the Service Charge Residential Management Code - and it marks one of the most significant upgrades to residential leasehold management standards in recent memory.

Laid as a Statutory Instrument (SI 2026/298) on 17 March 2026 and effective from 7 April 2026, this code now carries the approval of the Secretary of State following a review by the Ministry of Housing, Communities and Local Government (MHCLG). That matters: it means the code is not merely industry guidance but a formally recognised standard that RICS-regulated managing agents must follow - and one you can rely on when holding them to account.

One nuance worth knowing before diving in: the code distinguishes mandatory requirements ("must") from best practice ("should"). Not everything below is a hard-edged legal obligation, but departures from best practice need to be justified - so both carry real weight when a dispute reaches the tribunal.

Why was the code updated?

The 3rd edition dated back to 2016 - before the Grenfell Tower fire, before the Building Safety Act 2022, and before the Fire Safety Act 2021. The 4th edition catches up with:

• The Building Safety Act 2022 and its extensive new protections for leaseholders
• The Fire Safety Act 2021 and associated duties on building owners
• Evolving best practice around transparency, communication, and accountability
• Lessons learned from years of disputes at the First-tier Tribunal (Property Chamber)

More transparency in your service charge

One of the most practical improvements is a stronger emphasis on transparency in service charge accounting.

Demands should be accompanied by the approved budget and sufficient information to make clear how your individual proportion has been calculated - not just a total figure. Where the lease is silent on apportionment, the basis used should be demonstrably fair and reasonable.

The code expects budgets to use a standard format to allow year-on-year comparison, with sufficient detail in accounts so leaseholders can understand what they are paying for and why.

Preventative maintenance plans are a new addition: the code expects managing agents and landlords to plan and communicate anticipated future expenditure and reserve fund contributions. No more surprise bills for major works that should have been foreseen and funded gradually.

New builds get specific attention: initial service charge budgets must reflect realistic steady-state running costs - not artificially low figures to attract buyers. Any anticipated increases must be disclosed to prospective purchasers before they commit.

What you're entitled to see

The code expects your managing agent to:

• Send you a budget before or with the first service charge demand of each year
• Include sufficient detail to explain the nature of charges and the rationale behind expenditure levels
• Provide explanatory notes with year-end accounts, explaining any material variances from the budget
• Use a standard format to allow comparison between years

A failure to follow the code does not by itself make a charge non-payable. But the code is admissible in evidence at the tribunal, and non-compliance will count against the landlord or agent when the reasonableness of a charge is assessed. Separately, a demand that omits the landlord's name and address (section 47 of the Landlord and Tenant Act 1987) or the statutory summary of rights and obligations (section 21B of the Landlord and Tenant Act 1985) is not payable until corrected.

Building Safety Act protections - what's new in the code

The most significant new content is a dedicated section on the Building Safety Act 2022. While the law itself isn't new, the code now provides comprehensive guidance that your managing agent is expected to understand and apply.

Are you in a "relevant building"?

The protections under the Building Safety Act apply to leaseholders in a relevant building - defined as a self-contained building in England that contains at least two dwellings and is either:

• At least 11 metres high, or
• Has at least 5 storeys

These thresholds are lower than the "higher-risk building" category (which kicks in at 18 metres or 7 storeys), so a significant number of blocks fall within the protections below.

One exclusion to note: buildings that leaseholders collectively own - for example after collective enfranchisement, or under commonhold - are excluded from these particular protections. Different routes, such as remediation contribution orders, may still be available.

No cladding remediation costs for qualifying leaseholders

If you hold a qualifying lease - broadly, one granted before 14 February 2022 where the property was your only or principal home at that date, or you owned no more than two other UK properties in addition to it - then no costs of remediating external cladding defects can be charged to you under the Act's protections, whether through the service charge or any other means. The regime attaches to defects arising from works carried out in the 30 years up to 28 June 2022.

Caps on non-cladding remediation costs

For non-cladding building safety defects, there is a cascade of liability that protects qualifying leaseholders. Responsibility flows first to the developer (if still the building owner), then to landlords associated with the developer, then to landlords with net worth over £2 million per relevant building - before any costs can even be considered for leaseholders, and even then subject to statutory caps.

Landlord and leaseholder certificates

Landlords in relevant buildings must issue landlord certificates confirming their position on liability for relevant defects. The leaseholder deed of certificate works the other way round: you, the leaseholder, complete it and send it to the landlord. If the landlord serves notice requesting one, respond within the deadline - 8 weeks of the notice - because failing to return it when requested means the lease is treated as non-qualifying and the protections fall away. It is also worth completing one proactively when buying or selling.

Your core statutory rights - reinforced

Appendix B of the code sets out a full summary of your statutory rights. Key rights include:

Right to challenge service charges at the First-tier Tribunal

You can apply to the FTT to determine whether any service charge is reasonable and properly due under your lease - whether you've paid it or not. This right cannot be contracted out of.

Right to consultation on major works (Section 20)

If your landlord or managing agent wants to carry out works costing more than £250 per leaseholder, or enter into a long-term agreement for services (over 12 months, where any one leaseholder would pay more than £100 per accounting period), they must follow the statutory Section 20 consultation process. If they skip it, they can only recover £250 per leaseholder for works, or £100 per leaseholder per year under a long-term agreement, regardless of actual cost - unless the tribunal grants dispensation under section 20ZA.

Right to insurance information

Building insurance costs must be reasonable. You have the right to:

• Inspect the insurance policy
• Request a written summary of cover
• Challenge unreasonable insurance costs at the FTT

The code also tightens expectations around insurance commissions: managing agents should fully disclose any commission or remuneration received for placing insurance.

Right to a management audit

Qualifying leaseholders in England and Wales have a right to a management audit under sections 76 to 84 of the Leasehold Reform, Housing and Urban Development Act 1993, carried out by a qualified surveyor or accountant and covering both the accounts and the management of the building. Where the premises contain two dwellings let to qualifying leaseholders, either or both of them may exercise the right; where they contain three or more, at least two thirds of the qualifying leaseholders must act together. A single leaseholder can act alone only where the premises contain no other dwelling let to a qualifying leaseholder. Separately, a recognised tenants' association can appoint a qualified surveyor under section 84 of the Housing Act 1996 to advise on service charge matters, but that is a distinct right rather than a management audit.

Right to appoint a manager via the FTT

If your block is being poorly managed, you can apply to the FTT to have a new manager appointed by the tribunal - independent of the landlord.

Right to manage

Qualifying leaseholders may exercise the Right to Manage (RTM), taking over building management without having to prove fault on the landlord's part. The 4th edition includes a dedicated section (Section 16) on this process.

Better communication standards

The code introduces stronger expectations around proactive communication. Your managing agent should be telling you - without waiting to be asked:

• What services they're providing and how charges are calculated
• When material changes to plans or forecasts occur - promptly, not at year-end
• The landlord's name and address on every service charge demand (failure means the charge isn't payable)
• Information about any change of landlord or managing agent

Complaints and redress

Your managing agent must:

• Have a formal written complaints procedure
• Signpost you to alternative dispute resolution (ADR) or mediation before tribunal
• Be a member of a redress (ombudsman) scheme - a legal requirement for residential managing agents

If your RICS-regulated managing agent is not following the code, you can report them to RICS directly. Serious or persistent non-compliance can result in disciplinary action.

When does this apply?

The 4th edition is effective from 7 April 2026, and from that date it applies to everyone. The 3rd edition (2016) remains relevant only to tribunal or court proceedings about conduct that occurred before 7 April 2026. The Building Safety Act protections are already in force - the code doesn't create them, it guides how they must be applied.

If you believe your landlord or managing agent is charging you for cladding or building safety remediation in breach of the law, seek advice from the Leasehold Advisory Service (LEASE), which provides free, independent guidance.

The full code is available as a free download on the RICS Service Charge Residential Management Code page, along with a summary of changes from the 3rd edition and the Basis of Conclusions document.