UK house prices: Service charges for new-build properties are double those of older homes
Service charges on new-build properties have been dubbed a "hidden cost" that have reached an average of £2,777, according to a new survey by the insurer Direct Line for Business.
This cost is 96 per cent higher on new-build properties than the average annual property service charge in Britain, which is £1,863.
The survey also shows some 33 per cent of property management companies have increased service charges in the last two years and they vary between £1.55 per square foot for a new development in Croydon, to £7 per square foot for a development in Lambeth coming onto the market in 2017.
A trend for installing gyms, 24-hour concierge services, cinema rooms and other additions into many new-build developments, particularly in urban areas, was another factor adding to the increased servicing costs.
The survey also found that some developers are also requiring freeholders in private estates to pay for fees for the upkeep of communal gardens or private roads.
"Service charges are often a hidden cost, which should be factored in when considering the affordability of a property," Nick Breton, head of Direct Line for Business, said.
"In some cases service charges are uncapped and can escalate rapidly. Landlords need to take into account all associated costs when purchasing a property, such as service charges, ground rent and taxes that may impact their rental yield."