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.

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.

Apportionment schedules must now be provided so you can clearly see the basis on which your individual share has been calculated - not just a total figure, but a breakdown showing how your proportion was derived from the lease.

Budgets must use a standard format to allow year-on-year comparison, and the code requires sufficient detail in accounts so leaseholders can understand what they are paying for and why.

Preventative maintenance plans are a new addition, requiring 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

Your managing agent must:

• 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

If they don't, the service charge may not be legally payable until they do.

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.

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 UK properties - then no costs of remediating external cladding defects can ever be charged to you, whether through the service charge or any other means. This is an absolute statutory protection.

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. You have the right to a leaseholder certificate recording your status - particularly important 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), they must follow the statutory Section 20 consultation process. If they skip it, they can only recover £250 per leaseholder regardless of actual cost.

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 rules around insurance commissions: managing agents must fully disclose any commission or remuneration received for placing insurance.

Right to a management audit

You (or a recognised tenants' association) can arrange for a qualified surveyor or accountant to carry out a management audit of the landlord's management functions - covering both the accounts and the physical management of the building.

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. The 3rd edition (2016) continues to apply where existing management arrangements have not yet been renewed. 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.

This article is for general information purposes and does not constitute legal advice. For guidance on your specific situation, consult the Leasehold Advisory Service (LEASE) or a solicitor specialising in leasehold law.