What Does Buying A Leasehold Flat Really Mean…?

Oct 22, 2020 | 3 comments

As part of the transparent nature of our company, we pride ourselves on being able to explain to leaseholders what their service charge is and what it actually means. Education is a big part of our culture and this education improves leaseholders understanding which ultimately increases our service charge collection rates.

However, there are a number of people who purchase a leasehold flat without understanding the rules and constraints that exist and by which they must abide

When you purchase a leasehold property, you will be assigned to a lease which will define what areas are contained within your ownership. The lease will also confirm what conditions are to be adhered to and for how long you are entitled to the it.

It is important to understand that your ownership will not extend to the exterior of the building or the land which it sits on. This will be owned by the freeholder who is otherwise known as the landlord.

The lease is a legally binding document that outlines the rights, responsibilities and obligations between the leaseholder and freeholder. Normally the leaseholder is responsible for everything inside the leasehold flat – referred to as the ‘demised area’ and the freeholder is expected to manage, maintain, and repair the outside of the building and the communal areas.

Sometimes, there may be a Management Company written into the lease as an intermediate or 3rd party. This Management Company entity will typically carry out duties on behalf of both the leaseholder and Freeholder.

Service Charge

The services that the Landlord or Management Company will perform will be documented in the lease and include how these are split between each of the leaseholders. These responsibilities are funded by way of service charge which the lease refers to and are there to pay for the communal area costs such as cleaning, gardening, and electricity. There will also be a management fee in the service charge budget which is what a Managing Agent such as Transparent Property Management will retain for acting on behalf of the Landlord or Management Company. Your Managing Agent will therefore issue service charge demands and hold the funds on their behalf. This then allows them to proactively pay for services which will be needed to effectively manage the building and estate.

Each year as a leaseholder, you will receive a full breakdown of how the service charges collected have been spent. If less money has been spent than budgeted, you will then receive a refund of that years’ service charge. However, if more money has been spent, you will be expected to pay your share.


Covenants are conditions that you make a promise to adhere to by assigning yourself to the lease and taking ownership of the property. These covenants can sometimes seem restrictive in terms of what you can do in your flat. For example, the lease may specifically refer to the fact that you cannot hang washing on your balcony. Although the balcony may be demised, ie your own space, the lease will override and dictate what you may do to ensure that your actions are in keeping with the building. These are not rules which your Managing Agent have just created. They like you as the leaseholder are bound by these covenants and have a duty to ensure they are kept to.

It is therefore very important to read your lease thoroughly as there could be a number of items identified in the lease for which you must obtain consent from the landlord before you can proceed. These could include that you must obtain consent before:

  • You have a pet in your home
  • Sublet your flat to another person
  • Run a business from the property
  • Make changes to the layout of your property

Ground Rent

As above, the Freeholder will own the ground upon which your property sits upon. You may therefore as a leaseholder, who has a property on their ground, be liable to pay a ground rent to the freeholder. If you are, the amount and frequency in which you are liable to pay will be clearly clarified within your lease.

TPM are here to help!

This may make the idea of buying a leasehold property daunting but this is not the case if you take the time to read your lease thoroughly and not rely on your solicitor to inform you of what it contains.

Here at TPM we are more than happy to guide you through the points to ensure that you fully understand. This is an important, expensive purchase so you need to be fully aware of your obligations – check out our glossary for a full list of terms that you might come across when purchasing leasehold!


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