37% of flats now exceed the threshold some lenders use to screen. Upload your demands or type the numbers. We'll tell you where you stand.
What "unmortgageable" actually means in numbers
of leaseholders had a first mortgage application refused for leasehold reasons.
of remortgages were unsuccessful for the same reasons.
have lost a sale because the buyer couldn't get a mortgage.
Source: National Leasehold Campaign survey, November 2024. 51% cited onerous ground rent, 30% cited high service charges. Service charge is the lever that decides whether your buyer can borrow against your flat.
Service charges over a certain proportion of property value can fail a mortgage lender's affordability test or simply be refused outright. There is no single statutory threshold. Each lender sets its own rules, often expressed as a percentage of property value or as a ratio of service charge to monthly mortgage payment. The 1% rule is an industry rule of thumb, not a hard line, but it is the figure most commonly used to triage cases.
A "near 1%" or "above 1%" service charge does not automatically make a flat unsellable. It does mean fewer lenders, slower transactions, and lower offers. For specialist lenders the same property can be perfectly mortgageable. The risk is concentrated when the charge crosses 2% of value or rises sharply year on year without explanation.
Mortgage affordability calculations include service charge as a fixed cost. A high service charge reduces the borrower's headroom and can push them out of policy. FCA mortgage rulesFCA Handbook MCOB 11.6 requires lenders to assess affordability using committed expenditure including service charge. FCA MCOB 11.6 → require this assessment as a regulatory obligation, not a courtesy.
An informed buyer comparing two flats will discount the one with the higher service charge or walk away. Three years of rising charges with no breakdown of why is a credible reason to negotiate or withdraw. The Hamptons 2025 Service Charge Index found flats at or below 1% were 50% more likely to find a buyer than those at 2% or more.
Service charges must be reasonable and properly incurred. Section 19 LTA 1985Section 19 of the Landlord and Tenant Act 1985 sets the reasonableness test for service charges. Section 19 LTA 1985 → sets the test, and the First-tier Tribunal can reduce or strike out charges that fail it. A high service charge is not, on its own, unreasonable, but it is the trigger to ask for the breakdown.
For buildings over 11 metres, lenders may also require an EWS1 form (External Wall System) confirming the cladding is safe. A high service charge plus a missing or unsatisfactory EWS1 is the combination that most often makes a flat unmortgageable. EWS1 backgroundEWS1 was introduced by RICS following the Grenfell tragedy. The Building Safety Act 2022 has since narrowed when it is needed. RICS EWS1 explained →
Get the breakdown of why before you do anything else. The standard ask is a line-item budget for the current year and the previous two, with an explanation for any cost line that has risen by more than 15%. The draft email is on service-charge-rising.html. If the answer does not justify the level, the route is the First-tier Tribunal under section 27A of the Landlord and Tenant Act 1985. See tribunal.html.
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Lenders set their own thresholds, and they vary. Halifax and Santander typically flag service charges around 1% of property value; Nationwide nearer 0.75%; some specialist lenders accept 1.5% or higher. The 1% gauge below is an industry rule of thumb, not a single hard line. Always get a mortgage pre-assessment from your intended lender before drawing conclusions on saleability.
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