FAQs

What Is A Leasehold?

A Leasehold is a means of property ownership in England and Wales. Rather than owning the land and property forever, a lease gives you the ‘right to occupy’ a property for a stipulated amount of time usually between 99 and 999 years in accordance with the terms specified in a lease.

What Is A Lease?

A Lease is the legal document which sets out the legal relationship between the person who purchases the right to occupy a property (called the Lessee) and the person who owns the land (called the Landlord or Freeholder).

Do I Own My flat If Under A Lease?

No. When you purchase a leasehold flat, you are buying the right to occupy that flat for a period of time (this is defined in the lease).

As A Leaseholder What Are My Rights And Obligations?

Leases differ from building to building. Therefore, it is essential that you read through your lease to understand what your rights and obligations are.

What Is A Ground Rent and/or Service Charge Demand (Application For Payment)?

It is similar to an invoice and is the document which details your charges. It is referred to as a ‘demand’. This terminology is used as it refers to the legal mechanism which states that your charges are demanded to you.

Why Have I Been Charged For Ground Rent?

Some leases allow for a small amount of rent to be paid to your landlord/freeholder and this amount is called Ground Rent. Ground Rent will be issued to you on your application for payment and you will also receive a Ground Rent notice which is a legal document that accompanies ‘demands’ for Ground Rent.

What Is A Service Charge?

A Service charge is your contribution of the costs required to pay for expenditure relating to the repair and maintenance of the common areas of a building and other types of expenditure specified in the lease, i.e. lift maintenance, utility bills for the communal areas, gardening, cleaning, health and safety compliance, buildings insurance, general repairs, managing agents fees, entry phone maintenance, porter costs, etc.

What Is A Service Charge Budget?

This is a budget calculated by estimating the cost of repairing and maintaining the common areas for the next financial year. The budget is then charged to all the leaseholders based on the specified provisions set out in your lease. This amount is then charged to you periodically, the frequency of which is also dictated in your lease, either annually, half-yearly, quarterly, etc. Every building is different, so a service charge budget is specifically catered to the building’s individual requirements.

Why Have I Been Charged A Balancing Charge (Deficit) Or Received A Balancing Credit (Surplus)?

At the end of each financial year, service charge accounts are produced for your building. The actual expenditure is compared to the budget (the amount already charged to you). If the actual expenditure is less than the budget, you will receive a credit. If the actual expenditure is greater than the budget, you will receive a charge.

Why Have I Been Charged For A Reserve Fund?

A reserve fund is collected (if your lease allows) to ensure adequate funds are available when large non-annually recurring items are required to be repaired or replaced such as internal or external redecorations or replacement of aging communal equipment such as lifts, lighting, fire equipment, etc.