The RICS Service Charge Code 4th Edition — what it means for your development

Published May 2026 · 5 minute read

On 7 April 2026, the RICS Service Charge Residential Management Code (4th Edition) came into effect. Approved by the Secretary of State under the Landlord and Tenant Act 1985, it is the definitive current standard for residential leasehold service charge management in England. Here is what it means for RTM companies, RMC directors and the managing agents they appoint.

What is the RICS Service Charge Code?

The RICS Service Charge Residential Management Code is a code of practice that sets out how service charges should be managed in residential leasehold developments. It covers budgeting, accounting, procurement, contractor management, leaseholder communication, complaints handling and much more. It applies to landlords, managing agents, RTM companies and RMCs.

The code is not just best practice guidance — it is approved by the Secretary of State under section 87 of the Landlord and Tenant Act 1985. This means that courts and tribunals can take into account whether a party has followed the code when deciding service charge disputes.

What has changed in the 4th Edition?

The 4th Edition updates and strengthens the previous version of the code. Key areas of emphasis include greater transparency in financial reporting, stronger requirements around procurement and contractor management, clearer expectations around leaseholder communication and consultation, and more robust complaints handling requirements. The code also reflects the regulatory changes introduced by the Building Safety Act 2022 and related legislation.

What does it mean for RTM and RMC directors?

As the entity responsible for managing the development, your RTM company or RMC is expected to operate in accordance with the code — whether you manage the development directly or through a managing agent. If you use a managing agent, you should satisfy yourself that their processes are aligned with the code's requirements.

In practice, this means: budgets should be clear, realistic and properly consulted on. Expenditure should be documented and available for scrutiny. Contractors should be properly vetted and procured. Leaseholders should receive clear, timely communication. And complaints should be handled through a proper process that provides for independent redress.

What does it mean for managing agents?

Managing agents are expected to keep their service charge management processes aligned with the code. This includes providing transparent budgets and accounts, maintaining proper audit trails for expenditure, managing procurement in the development's interest rather than their own, and providing directors with the reporting they need to fulfil their responsibilities.

Critically, the code addresses conflicts of interest. Managing agents should not have undisclosed financial arrangements with contractors — no referral fees, no commissions, no arrangements that could compromise their duty to act in the development's interest.

How to check whether your managing agent follows the code

Ask your managing agent directly whether they operate in accordance with the RICS Service Charge Residential Management Code (4th Edition, 2026). Ask how they document expenditure, how they manage contractor procurement, and whether they have any financial arrangements with contractors. Ask to see an example of the financial reporting they provide to directors.

A managing agent who is genuinely aligned with the code will be able to answer these questions clearly and confidently. One who is not may find the questions uncomfortable.