Buying a leasehold flat: lease length, ground rent and service charges

Many first homes in towns and cities are flats, and most flats are leasehold. If you are buying one, it helps to understand what that means and what a mortgage lender will look at. The rules on leasehold are changing, so always check the current position with your solicitor.

What leasehold means

When you buy a leasehold flat you own the flat for a fixed number of years, set by the lease, but not the building or the land. Someone else, the freeholder, owns those. The lease sets out your rights and responsibilities, and you may pay ground rent and a service charge.

Why lease length matters

A lease gets shorter every year. A short lease can make a flat harder to sell and more expensive to extend, and many lenders have a minimum remaining lease length, often somewhere in the range of 70 to 85 years, depending on the lender. If a lease is short, it may need to be extended before you can get a mortgage, so find out the length early.

Ground rent and service charge

• Ground rent is a payment to the freeholder. Some leases have ground rents that rise over time, which can worry lenders and affect how easily you can sell.
• Service charge pays for the upkeep of the building, such as repairs, insurance and cleaning. It can change from year to year and may rise sharply if major works are needed.

Ask for the last few years of service charge accounts and for details of any planned works before you commit.

Building safety checks

For some taller buildings, or those with certain types of external wall, a lender may ask for a fire safety form known as an EWS1. Whether you need one depends on the building and the lender, so ask your agent and your solicitor early.

Converted flats and shared freeholds

Flats created by converting a house can have unusual arrangements, such as a share of the freehold. Lenders look at how the flat was created and who owns the freehold, so tell your adviser the address as early as you can.

Coastal and older buildings

Older buildings, and buildings close to the sea, can have higher maintenance costs shared between the flats, so it is worth asking what major works are planned and how they will be paid for.

Find out more

See how we help first time buyers and home movers, or find your area on our areas we cover page, including our pages for London and Southend-on-Sea.

Talk it through

If you are looking at a leasehold flat and would like to talk through the mortgage, get in touch.