Brocade
TL;DR: The RICS Service Charge Residential Management Code 4th edition took effect on 7 April 2026. If you manage residential blocks with variable service charges, including self-managed RTM and RMC companies, this is the code a tribunal will measure you against. It also flags four service charge reforms coming under the Leasehold and Freehold Reform Act 2024 that are not in force yet but are worth preparing for now.
Download the free RTM compliance guide →
What Changed
The Royal Institution of Chartered Surveyors (RICS) published the 4th edition of its Service Charge Residential Management Code and additional advice for landlords, leaseholders and agents in March 2026. It took effect on 7 April 2026, replacing the long-standing 3rd edition.
The 4th edition is approved by the Secretary of State under section 87(7) of the Leasehold Reform, Housing and Urban Development Act 1993, which makes it admissible in evidence in service charge proceedings.
That approval is the part that matters. Following the code is not itself a statutory duty. But because it is an approved code, a First-tier Tribunal (Property Chamber) or a court can take your compliance, or your failure to comply, into account when deciding whether a service charge was reasonable. In practice, the code is the benchmark for good management that a tribunal reaches for.
The code covers the full service charge lifecycle: variable service charges, budgeting and estimating, reserve and sinking funds, holding service charge funds in trust, demanding charges, and arrears. It also sets expectations on conduct (conflicts of interest, vulnerable consumers), data handling (UK GDPR), consultation, and routes to redress (the FTT and ombudsman schemes).
Does This Affect Your Building?
The code applies if a leaseholder in your building is required, or may be required, to pay a variable service charge. That sweeps in:
- Managing agents discharging management functions for residential blocks.
- Self-managed RMCs (resident management companies).
- Right to Manage (RTM) companies running their own blocks.
- Landlords, including self-managed lay boards.
If you are an RTM director who took over management from a freeholder or agent, the code applies to you directly. You are now the relevant person the code is written for. It does not matter that you are a volunteer leaseholder rather than a professional agent.
What's Coming: Four LAFRA 2024 Reforms the Code Flags
The RICS 4th edition names four service charge reforms coming under the Leasehold and Freehold Reform Act 2024 (LAFRA) and tells you to prepare for them before they become law. The code is explicit that LAFRA will supersede parts of it once secondary legislation is made. The four incoming service charge measures are:
- A ban on insurance commissions forming part of the service charge, for landlords, managing agents and freeholders.
- A standardised format for service charges, so leaseholders see costs presented the same way across buildings.
- Annual service charge reports. Where variable charges are collected and a block has four or more dwellings, a service charge account statement must also be provided.
- A right to request service charge information from the landlord, who will be required to comply.
These four measures require secondary legislation. At the time the code was approved, that legislation had not been introduced. They are not in force yet.
This is the critical accuracy point. The service charge transparency reforms sit in Part 4 of LAFRA 2024, which is on the statute book but not yet commenced (Leasehold and Freehold Reform Act 2024, Part 4). Until commencement regulations are made, the existing Landlord and Tenant Act 1985 regime, including the section 21B summary of rights and obligations and the section 20 consultation thresholds, still governs (Landlord and Tenant Act 1985, s.18–s.27A). Treat the four measures as a direction of travel to design for, not rules to apply today.
Compare Brocade to spreadsheet tracking →
What You Need to Do
You do not need to act on the unfinished LAFRA measures yet. You do need to align day-to-day management with the 4th edition now that it is in force.
- Read the code against your current practice. It is free to download (134 pages). Work through the section 5 service charge requirements and note where your budgeting, demands, and reserve fund handling differ.
- Check how you hold service charge money. The code expects service charge funds to be held in trust and kept separate. Confirm your client accounting reflects that.
- Tighten your demand and budget paper trail. A demand a tribunal can defend is itemised, issued on time, and backed by a budget the leaseholder saw. A budget line of just building safety, £18,000, with no breakdown is the kind of entry that gets challenged.
- Get ahead of the standardised format. When the LAFRA format lands, the agents who already present a clear, itemised, consistent budget will have almost nothing to change. Those exporting a different layout per building will.
- Plan for the four-plus-dwelling account statement. If you manage blocks of four or more, an annual account statement is coming. Building the habit of a clean annual reconciliation now means the future statement is a report, not a project.
What Happens If You Ignore It
There is no fine for not following the code. The risk is quieter and more expensive. When a leaseholder challenges a service charge at the First-tier Tribunal, the code is the yardstick. A managing agent who cannot show budgeting, consultation, and demands consistent with the approved code is on weaker ground, and unreasonable charges are not recoverable.
For an RTM company, the exposure is personal in a different sense: the directors are leaseholders too. A challenge that succeeds because the budget was opaque is money the block, including the directors, does not get back, plus the management time spent defending it.
Common Questions
When did the RICS Service Charge Residential Management Code 4th edition take effect? The 4th edition was published in March 2026 and took effect on 7 April 2026. It is approved by the Secretary of State under section 87(7) of the Leasehold Reform, Housing and Urban Development Act 1993.
Does the RICS service charge code apply to RTM and RMC companies? Yes. It applies to landlords, self-managed RMCs and RTM companies, and any managing agent discharging management functions where a leaseholder pays a variable service charge.
Is the RICS service charge code legally binding? Following the code is not itself a legal duty, but as an approved code it is admissible in evidence. A First-tier Tribunal or court can take account of compliance, or non-compliance, when deciding a service charge dispute.
What LAFRA 2024 service charge reforms does the 4th edition flag? Four: a proposed ban on insurance commissions in the service charge, a standardised service charge format, annual service charge reports with an account statement for blocks of four or more, and a leaseholder right to request service charge information. These need secondary legislation and are not yet in force.
Are the new LAFRA service charge transparency rules in force yet? No. The service charge transparency provisions in Part 4 of the Leasehold and Freehold Reform Act 2024 are on the statute book but not yet commenced. The existing Landlord and Tenant Act 1985 regime still applies until commencement regulations are made.
Further Reading
- Service Charges and Building Safety Costs: A Guide for RTM Directors
- The Commonhold and Leasehold Reform Bill: What It Means for RTM Companies and Managing Agents
- Building Safety Act Costs: What Building Managers Should Budget For
- Managing Agent Portfolio Building Safety Triage
- Service Charge Residential Management Code, 4th edition (RICS, free PDF)
- Leasehold and Freehold Reform Act 2024, Part 4 (legislation.gov.uk)
This article is for informational purposes and is not legal advice. For building-specific guidance, consult a qualified property professional.