If you're buying a leasehold flat or renting certain commercial premises, service charge and — for older leases — ground rent are recurring costs on top of your mortgage or rent. Both are worth understanding before you commit.

Service charge

This covers the cost of maintaining shared parts of a building — things like buildings insurance, cleaning, lift maintenance, and repairs to the roof or structure. It's usually reviewed annually and can vary significantly between buildings.

Worth checking early: the service charge history for the last few years, and whether any major works are planned, since a big one-off bill can follow shortly after you move in.

Ground rent

A payment to the freeholder simply for holding the lease, separate from service charge. Reforms in recent years have restricted ground rent on most new long residential leases, but older leases can still carry it.

  • Ask for the service charge accounts — recent statements show whether costs are stable or rising sharply
  • Check for a sinking fund — a reserve for future major works can reduce the risk of a sudden large bill
  • Confirm the ground rent terms — including whether it increases and on what schedule, if the lease predates recent reforms

Can I challenge a service charge I think is unfair?

There are formal routes to query or challenge service charges, typically starting with a written request for more detail from the managing agent or freeholder.

Is ground rent still charged on new leases?

Recent legislation has restricted ground rent to a nominal amount on most new long residential leases, though the detail depends on when and how the lease was granted.

This guide is for general information only and is not legal or financial advice. Always review the specific lease terms and recent accounts for the property you're considering.