Buying and selling: an introduction

The lease is the written agreement that gives you the right to live in and use the property and share the use of other areas of the building or estate. The same lease is passed on every time the flat is sold, so the length of the lease keeps reducing.

You should be aware that if the lease has less than 80 years remaining, you will generally have to pay a high cost (known as a premium) to extend it. This price increases as the lease reduces in years. Most mortgage companies will only lend on a lease that has more than 80 years remaining; therefore, it’s recommended to extend your lease before it falls below 80 years.

Find out more about leasehold.

Service charge is the payment, usually made in advance, for your share of all the costs of maintaining and insuring the building. The charge can vary year by year depending on the services provided and what the managing agent spent on the building.

Before buying a leasehold property, it is important to know your service charge as this will be an ongoing commitment every year.

Find out more about service charges.

This is usually a yearly charge which you pay to the landlord. It may rise over time, and this is something that you should check before buying.

Find out more about ground rent.

The managing agent is a professional, hired by the landlord or in some cases a residents’ management company. Managing agents are typically hired for buildings that have been divided into flats.

They often arrange:

• services
• Repairs
• Maintenance
• improvements or insurance

Find out more about how leasehold properties are managed.

Some leases allow landlords to collect extra money from flat owners every year towards large, but infrequent, work projects such as:

• decorating the outside of a property
• replacing the lift
• replacing the roof

This means the cost of major work can be spread over a number of years.

Find out more about reserve or sinking funds.

A residents’ association is a group of residents (normally leaseholders) who live in houses or flats which have leases from the same landlord. A recognised tenants’ association is one which has specific rights by law, and whose members have come together to represent their common interests so that the association can use those rights to act on their behalf.

Find out more about residents' associations.

Flat owners have a share of the freehold if the whole building is owned by all of the flat owners, typically through a company in which they each have a share.

However, having a share in the freehold does not mean that you can do as you please. You must still keep to the terms of the lease.

Find out more about owning a share of the freehold.