The RICS Residential Service Charge Code gets an overhaul: What are 5 key changes?

The 4th edition of the RICS Service Charge Residential Management Code comes into effect on 7 April 2026, replacing the 3rd edition which has been in place since 2016. Crucially, the Code can be relied upon for evidential purposes before the courts and tribunals. In addition, it has been elevated from a guidance note to a professional standard, meaning that compliance is mandatory for RICS members.

This latest edition incorporates changes driven by two major pieces of legislation: the Building Safety Act 2022 and the Leasehold and Freehold Reform Act 2024 (“LAFRA 2024”). The result is a code that is broader in scope, more prescriptive in its expectations, and far more closely aligned with the regulatory landscape that landlords and managing agents now operate within.

Updates to include a building safety focus

Section 9 is a new addition dedicated to the Building Safety Act 2022, covering higher-risk buildings, accountable persons, duties on residents and owners, implied lease terms related to building safety, and the leaseholder protections regime. The code is updated to bring it into line with the changes to the regulatory landscape in terms of building safety since 2022. A new Appendix D also sets out the additional information leaseholders in higher-risk buildings can expect to receive, from whom and when.

Equality and ethics front and centre 

Updated sections address duties regarding protected characteristics, direct and indirect discrimination and the duty to make reasonable adjustments reflecting the Equality Act 2010. There is also expanded guidance on quiet enjoyment, updated provisions on money laundering, and enhanced data protection requirements reflecting the GDPR and the Data Protection Act 2018. 

Greater rigour on service charge accounting

New provisions on the approval of service charge statements and external examination of accounts have been introduced. 

Expanded scope for social housing

The code now explicitly applies to both for-profit and non-profit private registered providers of social housing and to local authorities, with dedicated sections clarifying which provisions apply and which do not. The aim is to provide leaseholders in the social housing sector with the same levels of openness and transparency as those in the private sector. 

Insurance commissions and transparency

The code references proposals to ban insurance commissions forming part of the service charge. LAFRA 2024 provides that only permitted insurance fees can be collected with secondary legislation planned (but not yet available) to determine the scope of permitted insurance payments and excluded insurance costs. For now, the code continues to confirm that insurance fees including commissions received by the landlord or managing agent, arising out of the placing or management of insurance should be declared annually to leaseholders and should be transparent and proportionate to reflect the value for money of the services carried out.

What can we do to prepare? 

The changes reflect a clear direction of travel towards greater accountability and transparency of service charges in the residential sector. The code expressly acknowledges that some parts of LAFRA 2024 have not yet been implemented via secondary legislation. When they are, some elements of the code will be superseded, however, landlords and managing agents are reminded to ensure compliance with LAFRA 2024 when relevant provisions come into force. With the effective date for implementation of the code on 7 April fast approaching, managing agents should audit current practices against the new code.