A lot of my clients ask when buying a leasehold property what the service charge and ground rent actually is and what it is for?
Let’s be clear ground rent and service charges are not the same thing.
Ground rent is the money that you pay as a leaseholder to the Landlord or Freeholder for basically renting the land that the leasehold property sits on. This is usually a fixed sum and is paid annually.
The service charge is payment for all the services (such as maintenance of gardens and communual areas) that you as a leaseholder will use but will not be specifically responsible for. This will often be an estimate of what the landlord will anticipate will be for the forthcoming year.
Quite often this will be collected through a management company on behalf of the Landlord or Freeholder.
Under the terms of the lease you will be responsible for paying these amounts.
When purchasing a leasehold property your solicitor will investigate whether the ground rent and service charge has been paid up to date and ask questions such as whether it is likely to increase in the coming year. On completion of your purchase your solicitor will ensure that all arrears have been paid and that you will not be responsible for debts incurred not during your ownership.
If you have any questions about Ground Rent or Service Charges please get in touch by email or by leaving a comment on this blog. Or if you need a leasehold conveyancing quote then use our on-line quote system