Running costs of a new London flat:
service charge and ground rent.

First, briefly: what leasehold means

Most flats in England are sold leasehold. You own the flat for the period set in the lease; the building and land belong to the freeholder. The lease sets out what you pay towards the building’s upkeep, which changes need permission and who is responsible for repairs. It is the basis of every cost below.

Check the remaining term. According to GOV.UK, once 80 years or less remain the cost of extending rises significantly; a qualifying flat owner can add 90 years to the lease. Since January 2025 you no longer need to have owned the flat for two years to make that claim.

What the service charge covers

The service charge is your share of the cost of running the building, and your lease sets out what can be included. According to the Leasehold Advisory Service (LEASE), in most buildings it covers:

• Maintenance and repair of the common parts, such as entrances, stairs and the roof
• Buildings insurance
• Cleaning and lighting of shared areas
• Maintenance of shared systems such as lifts, boilers or alarms
• Outside space such as gardens
• A contribution to a reserve fund (sometimes called a sinking fund) for expensive work that is not done every year

Whether the cost of shared facilities such as a concierge or gym is included is also set by the lease.

Money paid into a reserve fund is not usually returned; GOV.UK notes you will not get it back if, for example, you move house. Buildings insurance is usually the freeholder’s responsibility and part of the service charge; your contents are not covered by it.

The estimated budget and the actual account

According to LEASE, most modern leases allow the service charge to be paid in advance against an estimate. The charging period is often a year, though you may pay every 6 or 3 months.

If actual costs at the end of the year are higher than the payments, you are asked to pay the difference. If they are lower, depending on the lease, the surplus may reduce next year’s charge, be refunded or go to the reserve fund.

That is why a single annual figure tells you less than two years of actual accounts. In an older building, ask for recent accounts. How your share is split is also in the lease: by floor area, by number of rooms, equally, or by another measure. Our project pages show a service charge only where the developer has published one, with its source and date; for example London Square Woolwich.

A new building has no history: what to ask for

A new building has no actual accounts yet; you rely on the developer’s budget. For reservations made from 2 March 2026, a developer registered with the New Homes Quality Code must state in the reservation agreement the estimated yearly cost of management services, the costs that come with the tenure and how these may change in future.

The Code also requires a schedule of the costs expected over the five years after the sale (the Affordability Schedule). It covers:

• Any ground rent, with its amount and formula
• Management fees
• Service charges that may rise or be added as more facilities open
• Reserve fund charges
• Maintenance of shared equipment such as a communal heating system

If the developer does not know an amount, it must still list the item without a figure. Ask for this schedule in writing before you reserve.

Your rights as a flat owner

According to GOV.UK, if you pay a service charge:

• You have the right to a summary of how it is worked out and what it is spent on, and to see supporting paperwork such as receipts; it is a criminal offence for the landlord not to provide this.
• You must be consulted before you are asked to pay more than £250 as your share of planned work, or more than £100 a year for work and services lasting more than 12 months (the Section 20 process).
• If you think a charge is unreasonable or the work is poor, you can apply to a tribunal.

According to LEASE, service charges must be reasonable, the work must be of a reasonable standard and the service must be in the lease. The landlord must ask you to pay, or tell you about the cost, within 18 months of incurring it; otherwise you do not have to contribute.

On the other hand, if you stop paying a charge you are responsible for, the landlord can take you to court.

Ground rent

Ground rent is a payment to the freeholder for which no service is expected in return. The Leasehold Reform (Ground Rent) Act 2022 limited ground rent to a peppercorn, meaning nothing is paid, under most new long residential leases granted from 30 June 2022.

For retirement properties the Act did not come into force before 1 April 2023. Charging ground rent in breach of the Act can lead to fines of up to £30,000.

The Act does not change existing leases. If you buy a lease granted before 30 June 2022 from another flat owner, you keep paying any ground rent the lease sets; it can only rise if you agree or the lease provides for it. If the lease contains an increase clause, ask your solicitor about it separately.

Estate charges and other costs

On some new developments, shared areas outside the building, such as landscaping and roads the council does not adopt, are run by a separate management company that charges an estate charge. According to MoneyHelper this is usually paid by freeholders, but some leaseholders pay it on top of ground rent and service charges.

The 2024 Act’s provisions giving new rights to people who pay these charges are not yet in force.

Council Tax is paid to the council, and electricity, water and broadband to their providers. If you let the flat, the service charge and ground rent can be deducted as expenses; we cover the tax side in our guide to letting from Türkiye.

Building safety

Since 28 June 2022, the Building Safety Act 2022 has protected qualifying flat owners in buildings over 11 metres or five storeys from the cost of fixing historical safety defects. Whether a particular flat benefits depends on the building and the lease.

As a buyer, ask whether any remediation work is planned and whether costs are expected to reach the service charge or the reserve fund.

Leasehold reform: what is in force?

• In force: ground rent limited to a peppercorn under most new long residential leases (30 June 2022; retirement properties 1 April 2023).
• In force: no two-year ownership requirement for a lease extension or freehold purchase claim (31 January 2025).
• In force: the non-residential limit for Right to Manage in mixed-use buildings rose from 25% to 50%, and in most cases flat owners no longer pay the freeholder’s legal costs of the claim (3 March 2025).
• In force: leases of more than 21 years no longer count as assured tenancies (27 December 2025).
• Not yet in force: the service charge transparency measures, meaning a standard demand form, annual reports, wider rights to information and limits on buildings insurance commissions. They are in the Leasehold and Freehold Reform Act 2024; the government says it will bring them in through secondary legislation.
• Not yet in force: new rights for people who pay estate charges, the 990-year statutory extension and the new valuation method without marriage value. The government says the valuation provisions first need correcting through new primary legislation.
• Draft only: a £250 yearly cap on existing ground rents (becoming a peppercorn after 40 years), a ban on most new leasehold flats and commonhold as the default for new flats. These are in the draft Commonhold and Leasehold Reform Bill published in January 2026; on 14 October 2026 it was not on Parliament’s list of bills.

Last checked on 14 October 2026 against GOV.UK and legislation.gov.uk: leasehold toolkit · Leasehold and Freehold Reform Act 2024 · service charges and other expenses · Ground Rent Act 2022 · building safety protections · LEASE: how service charges are calculated · New Homes Quality Code V2. General information, not legal advice on your own situation.