Historical mortgage lender requirements: service charges and major works

That depends on what was foreseeable and what was disclosed at the time, which is why the enquiry matters as much as the answer. The general instruction requires the conveyancer to enquire whether the landlord or managing agent foresees any significant increase in the level of the service charge in the reasonably foreseeable future and, if there is, to report to the lender. So the questions are what enquiry was made, what the managing agent’s reply disclosed, whether what it disclosed amounted to a foreseeable significant increase, and whether that was reported. A programme may have been merely contemplated, formally consulted on, agreed but unbilled, or already demanded at the date of your purchase, and those are materially different positions. What your lender required to be reported, and what it wanted supplied with the report, is what the dated record establishes.

The general instruction does not say, and most lender answers do not either. Of the 129 profiles carrying the service charge contact question under the number used for counting in the most recent scan, four answers contained the specified wording about thresholds, major works or section 20 notices. Where answers do define it, they differ. Two treat an increase as significant where it exceeds £1,000 a year and ask what the new level will be and why. One asks to be told where the service charge exceeds 1% of the property value, together with planned significant increases or other potentially onerous matters. Another sets a cap rather than a reporting trigger: the maximum total service charge, including ground rent and any sinking fund contribution, must not exceed 2.5% of the property value. These are examples from particular dated answers rather than a panel-wide rule, and where no figure is given the judgment sits with the conveyancer under the general instruction.

Not on the answers examined. Two lender answers require, where works are planned for which the borrower is liable, a full list of the works, an estimated timescale, and the cost together with the borrower’s contribution, and say expressly that this applies whether or not a section 20 notice has been issued. The same answers require enquiries to be submitted at least two weeks before exchange. That matters because consultation runs in stages: works can be well advanced in contemplation before any notice is served. Whether a particular lender took that approach on a particular date is established from its dated record.

That is a question for the contract and the apportionment rather than for the lender’s instructions. Sale contracts deal with service charge apportionment and sometimes with retentions against anticipated works, and the position depends on what was agreed and on the lease. The lender’s instructions address a different question: whether the position had to be enquired into and reported. The two interact, because what the managing agent disclosed usually informs both, but an answer on one does not determine the other. The historical record establishes what the lender required; the contract and the file establish what was agreed and done.

That is the most common form of answer on this topic, and it is not the same as having no requirement. Where an answer gives only a contact point, the general instruction still applied: the conveyancer had to enquire about a foreseeable significant increase and report one if there was. The absence of a lender-specified threshold leaves that judgment with the conveyancer rather than removing it. You receive the complete Part 2 record either way. Part 2 is the lender-specific component of the instruction framework: a transaction investigation must also consider the general Part 1 instructions applicable at the time, the mortgage offer and its conditions, and any case-specific correspondence. Where no express topic wording is identified, that should not be treated as establishing that the lender accepted the circumstance without restriction.

The answers have been amended throughout. Lexsure’s England & Wales records contain 243 recorded amendments to the service charge contact answer between 2009 and 2026, of which 54 are provisionally classified as having changed the practical requirement and the remainder as non-substantive. Because that answer carries other content in some profiles, those figures are not counts of service charge policy changes alone. Among the amendments classified as substantive are the introduction of the £1,000 reporting threshold and the associated requirements about planned works, and the later introduction of percentage-of-value limits by other lenders. Such amendments could change the applicable requirement; their effect on a particular transaction depends on the instructions and timing relevant to that transaction. Either way, a lender’s current published policy is not evidence of what it required on an earlier transaction date.