9 Questions to Ask When Buying A Leasehold Flat in Central London

If you are considering buying a leasehold flat in Central London, there are some important questions to ask before making an offer for the property. Whether you are purchasing the property to live in or rent it out, failing to ask the right questions could lead to problems further down the road.

What Is A Leasehold?

When you start your property search, you will notice that some are described as freehold and some as leasehold. Depending on which you buy, there may be limits on what you can do with the property.

In England and Wales, most flats are owned on a leasehold basis, so if you are looking to buy a flat in Central London, there is a good chance it will be leasehold.

The key difference between leasehold and freehold is that with a freehold property, you own both the property and the land it is built on. With a leasehold, somebody else owns the land, and you will usually need to pay ground rent, service charges or permission fees.

The UK Government introduced leasehold reforms in the form of the Leasehold and Freehold Reform Act in May 2024. However, the law has not come into force yet. The reforms are intended to make it cheaper and easier for people to extend or buy the freehold and the standard lease extension term should increase to 990 years for houses and flats. This would be a significant increase from 50 years for houses and 90 years for flats.

So, if you are considering buying a property in an area such as Earl’s Court or Mayfair, where many properties are leasehold, the planned reforms should help to set your mind at ease. We cover more details about the progress of the Leasehold and Freehold Reform Act 2024 later in this article.

To make sure you have all the information that you need about the property, ask these questions before making an offer on a leasehold flat in Central London:

1. How long is left on the lease?

The length of the lease determines how long you have permission to live in the property. Therefore, a longer lease is better than a short lease. The lease length on a property can vary greatly, usually anywhere between 125 years to 999 years.

If less than 70 years are left on the lease, this can be a problem. You may find it difficult to sell in the future and mortgage lenders will see this as a risk and may refuse to approve a mortgage on the property.

Once you have owned a leasehold property for two years, you will usually have the option to extend the lease. If there are less than 80 years left on the lease, it is a good idea to ask the seller to extend the lease before you buy the property.

To find out more about why you may want to extend your lease and the expected cost, read our blog on How to extend the lease of a Central London property.

2. How much is the service charge, and what is included?

Another of the most important questions when buying leasehold property is how much the service charge is and what is included. The service charge is an annual fee paid to the management company or landlord and covers the cost of maintaining communal areas of the building and sometimes includes buildings insurance.

The lease will detail how much you must pay for the service charge and what is included. Generally, service charges need to be paid once or twice a year, and you may have the option to spread the cost and pay monthly.

Want to find out more? Take a look at what a mews house is and buying a new build home.

3. How much is the ground rent?

The ground rent payment can vary significantly between properties, so this is another question about leasehold agreements that you should ask. The ground rent will usually be somewhere between £10 and £300 per year, but it can be subject to change, and the ground rent is usually reviewed every 20 years. Your conveyancer should be able to tell you what the ground rent agreement is and when it was last reviewed.

4. What are the terms and costs for extending the lease?

Check what the current terms are for extending the lease, your conveyancer should thoroughly review the terms of the lease to identify any concerns.

Under the existing legislation, people have the legal right to extend a lease once they have owned the property for two years, but this is likely to change under the reforms.

The reforms should also make it cheaper to extend leases. Currently, extending a lease can cost from £5,000 to tens of thousands. There are two different costs included:

• The premium for the lease extension (usually £5,000 upwards)
• Professional fees and taxes (around £2,000 to £3,000 or more)

Before you make an offer on a leasehold house or flat, ask whether the seller has already initiated an extension, as they will then be covering these costs.

5. Are there any planned works for the building?

Before you set your heart on a new flat in Central London, you should check whether any major works are planned for the building. This could affect your service charges as there could be an upcoming large payment that you hadn’t factored into your finances.

Some leasehold properties have a reserve fund (sometimes known as a sinking fund) as part of the service charges that is in place to build up a pot of money that will pay for any future irregular costs.

6. Are there restrictions in the lease?

You should also check with your conveyancer whether any restrictions or covenants set out in the lease will limit how you live in and use the property.

There may be positive covenants included in the lease, which means there is an obligation to do something, such as ensuring regular maintenance and repair of the exterior of the building.

Want to know more? You may also be interested in whether you need a home buyer’s survey and renting vs buying a house.

Another type of covenant inserted into leases is a restrictive covenant, such as a restriction on what you can and can’t do. For example, you may not be legally entitled to rent your property out or take on a lodger. Some leases even restrict you from having pets in the property or installing satellite dishes. There could be a restriction on removing walls or installing certain types of flooring.

7. Who owns the freehold, and is there an option to purchase it?

Before you put an offer in for a leasehold property, it is a good idea to find out who owns the freehold. You can check this on the HM Land Registry website or ask your conveyancer to provide the details from the lease.

Some freeholders offer the option for homeowners to purchase the freehold but others don’t, so this is an important detail to find out. If the freeholder does not provide the option for purchasing the freehold, this could cause problems further down the line.

8. Are there any outstanding debts or arrears on service charges or ground rent?

You also should check that you won’t be inheriting any outstanding debts or arrears for unpaid service charges or rent from the seller. To do this, you can request copies of the service charge accounts and receipts for ground rent payments to ensure payments are up to date.

9. Who are the managing agents?

It is also a good idea to find out who the landlord or managing agents are and to see what sort of reputation they have. You may be able to find some online reviews of the company, and you should be able to find out more information about them to see whether property owners have had any issues with the property in the past.

Buying a leasehold flat and the Leasehold Reform Bill

If you are considering the option to buy a leasehold property, the good news is that the Leasehold and Freehold Reform Act 2024 has outlined some major improvements for owners of leasehold properties and when the legislation comes into effect, it will become easier and cheaper for property owners to extend leases.

As well as improving rights for extending a lease or buying the freehold, the two-year wait to extend leases will be abolished and it will be easier to challenge unreasonable costs through a tier tribunal.

A new draft of the Leasehold Reform Bill is expected in the second half of 2025, so buying a leasehold flat will be less complicated in the future, with more security and lower lease extension costs for leasehold property owners. Leaseholders will be protected from excessive rent increases through the proposal of using the Retail Price Index to adjust ground rents.

There should also be changes to ensure that ground rent for shared ownership leases will be reduced to a peppercorn payment to minimise charges.

Are you looking to buy a flat in Central London? Plaza Estates is a London-based estate agent specialising in leasehold properties. We can help ensure you have the answers to all the essential questions about leasehold properties. Contact us today for more information about leasehold properties or to view our properties in Central London.

Looking to Sell or Let?

Begin your journey with a free property valuation.
Get the facts and figures to make informed decisions.

Book a Valuation

Property Valuation

"*" indicates required fields

VALUATION TYPE*

SALES

RENTAL

RENTAL & SALES

Property Address*

Property Postcode*

Full Name*

Email*

Contact Number*

Additional Information

View our privacy policy regarding website enquiries.

This field is hidden when viewing the form

office

Submit

Contact Us

"*" indicates required fields

First Name*

Last Name*

Phone/Mobile Number*

Email Address*

Message

View our privacy policy regarding website enquiries.

This field is hidden when viewing the form

office

Submit