Let’s talk leasehold charges

6 May 2020 | Jema Thaker

Buying a home warrants a financial commitment like no other. From needing cash for a deposit, mortgage fees, conveyancing fees, stamp duty and moving costs, the list is extensive! And it doesn’t stop there if you are buying a leasehold property, in fact, there may be “hidden” costs beyond those listed above. In this article I aim to summarise what these are when buying a leasehold property.


There are two different types of ownership that generally apply when buying a property in England and Wales:

Freehold: you own both the land and the building that sits on it.

Leasehold: you own the building, however the land is leased from the freeholder or landlord for a specific time and you must pay ground rent and possibly service charges.

It can be complicated and potentially expensive buying a leasehold property. The lease will set out the detailed terms on which you are entitled to live in the property, including your rights and responsibilities as a leaseholder.


The types of charges can be divided into three groups.

  1. Ground rent: this is usually a yearly charge which you pay to the landlord. It may rise over time.
  2. Service charges: this is a charge towards the day-to-day running costs of the development and is used to cover items such as building insurance, maintenance, repairs, gardening and communal facilities.
  3. Administration charges discussed below.

So what are these ‘hidden’ costs when buying a leasehold property?

Simply becoming the new lessee can bring a cost. Your solicitor may be required to provide a Notice of Assignment to the landlord informing them you are the new owner and you’ll have to pay for that privilege, likely to be around £100 plus VAT.

If you are buying with a mortgage, another essential document is a Notice of Charge that informs the landlord, a third party holds an interest in the property. The cost of this could range between £50 to £200.

Some leases require that you enter into a Deed of Covenant to confirm that you will be bound by the terms of the lease. This is a direct contract between, you, the buyer and the leaseholder. This deed might be a part of a landlord’s pack, provided to your solicitor and can cost up to £350 (or even more).

Another document is the Certificate of Compliance. This is a document which confirms to the Land Registry that the requirements in the lease for the change in ownership have been completed with. The charge for this could be between £50 to £100.

It may be a requirement to become a member of the Management Company. This brings with it the possibility of another charge – becoming a shareholder in the management company or residents’ association that runs the building. There is usually a nominal fee involved in having a share certificate issued in your name.

I hope this has given you an idea of the charges to look out for when buying a leasehold property. If you would like more information with any of the above, please get in touch.

Blog post written by Jema Thaker, solicitor in the Property Law team.

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