In 2016, when Caroline Beddows bought her three-bedroom house in Lancashire, she made sure it was freehold and not leasehold. She had read reports of high service charges and ground rent being charged to leaseholders across the country and was determined to avoid both.

But to her horror, within months of moving into the house she received a bill for around £150. She discovered that, even though she was the freeholder, she would still have to pay annual fees towards maintaining a small patch of grass on the estate where her house is situated.

To complete the purchase, she had instructed a solicitor who had been recommended by the developer. But she says the solicitor failed to warn her that she would be liable for service charges.

Caroline, who is divorced, said: ‘It was the first time I bought a house on my own and they said it would save me money to use that solicitor. I now regret using them and it still makes me angry.

‘I do like my house, but I feel I was left in the dark over what I was buying.’

Service charges, which are most commonly paid by leasehold homeowners, have soared in recent years. Families have been forced to pay as much as £30,000 a year in the most extreme cases and have found it hard to sell their home as a result.

Many leaseholders, especially those in apartment blocks, also have to pay an annual service charge which goes towards the upkeep of the building and any shared areas. It commonly covers services such as buildings insurance, cleaning, gardening, repairs of communal areas, surveyors’ fees, fire risk assessments and agents’ fees.

But in a little-known loophole, freehold houses can also come with service charges or estate management charges, also known as estate rent charges. They have become an increasingly common feature of new-build estates, with the charge bound to each property through the title deeds.

Caroline Beddows with her daughter, Charlotte, who is also facing the burden of service charges. There has been no buyer interest for the flat Charlotte inherited in Saffron Walden, Essex, because of the £4,500 annual service charge

Owners of at least one million newly built homes face paying these estate charges, according to the HomeOwners Alliance. They typically have no way to challenge them, nor to take over the management jobs themselves.

The charges tend to cover any communal gardens or lawns, private roads, pavements, car parks and play areas located within the housing estate. In the past, the local authority might have provided these services, but when new estates are built, councils don’t have to take responsibility for them, so the residents must fund the upkeep themselves.

In Caroline’s case, her charges are mainly to pay for a ‘scrap of land that requires mowing every now and again,’ she says.

She adds: ‘The patch of grass is so small you couldn’t even have a game of five-a-side on it. For many years we were being charged for gardening despite no gardener ever turning up. Luckily we have someone now.

‘We also have to pay for tree surgery on account of there being about three trees on that patch of grass. We are collectively charged £500 every year and I have not seen any evidence of those trees being pruned or cut back in all my time here.’

But it’s not the gardening and tree surgery bills that most concern Caroline – it’s the rising management fees that might make it impossible to sell her house in Garstang, near Preston, in the future.

She says: ‘After receiving the service charges for 2026, I worked out that the gardening aspect had risen by 2 per cent but the “management” part had gone up by 20 per cent in the past year alone to £4,111 for the whole estate.’

Caroline says the homeowners on the estate were promised management fees would not rise by more than 5 per cent a year back in 2017. But this cost has jumped by 48 per cent in the past five years. While Caroline currently pays £317 a year for her share, she fears this will balloon further.

Other costs on the estate’s budget also rose last year at an alarming rate, she says.

The cost of postage and couriers the management company charges to those on the estate rose from £300 to £800, despite almost all communication being over email. And a fee for company secretarial services more than doubled to £1,230.

Caroline's service charges are mainly to pay for this ‘scrap of land that requires mowing every now and again’, she says. She currently pays £317 a year for her share, but fears this will balloon further

‘Unlike council tax, there is no cap on what our costs could increase by,’ says Caroline.

Freeholders can pay substantially more than Caroline must hand over.

Service charges on housing estates average £1,069 a year, according to research by analytics firm PropertyData.

So what are the warning signs that a freeholder may have to pay service charges?

Anyone buying a house on a new estate is at high risk, experts warn. Around 80 per cent of new homes sold by the 11 biggest builders in Britain are subject to estate management charges, according to HomeOwners Alliance.

It estimates that owners of at least one million newly built homes on 20,000 new housing estates face paying these estate charges and permission fees. A permission fee is when a management company charges homeowners for making alterations to their property, such as building an extension.

You should check the title deeds for any covenants that might bind you to these ongoing costs and see if there are caps that limit how much they can rise by each year.

Ask the developer or selling agent if the estate is going to be adopted by the council when it is completed – and, if not, which parts will remain in private ownership. This will give you an idea of whether you could be charged or not.

Service charges have become a blot on the leasehold sector in recent years, as costs have spiralled out of control.

Caroline says service charges have also become a burden for her daughter, Charlotte, who inherited a retirement flat in Saffron Walden in Essex when Caroline’s mother died in 2024.

The flat, which was bought in 2017 for £180,000, is now on the market for £115,000 as there has been no buyer interest because of the £4,500 annual service charge, Caroline says.

This charge increased by 37 per cent in 2025 compared to the previous year, she adds.

As many as 90 per cent of leaseholders regret buying a leasehold property, according to a recent study by Propertymark, the leading membership body for estate agents and letting agents.

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