Ground Rent and Service Charge: What They Mean (and What to Check)

If you're looking at renting, or buying a leasehold property, ground rent and service charge are costs that need to be considered.

They can affect:

• monthly/annual running costs
• mortgage affordability (if buying)
• resale appeal (high or unpredictable charges can put buyers off)

Key takeaways

• Ground rent is paid to the freeholder under the lease.
• Service charge covers the costs of services and maintenance (if any)

Ground rent

What is ground rent?

Ground rent is a fee written into a leasehold property's lease, typically paid by leaseholders (home owners). It's paid to the freeholder (or landowner) because the leaseholder has the right to occupy the property for a fixed term but does not own the freehold land outright.

It’s often charged yearly. Some older leases have a low “token” ground rent. Others have higher ground rents or review clauses that increase the rent over time.

What is ‘Tenure’?(leasehold vs freehold)

What changed in England & Wales?

In England & Wales, the Leasehold Reform (Ground Rent) Act 2022 effectively ended ground rent for most new qualifying long residential leases by limiting it to effectively, zero. Older leases can still have ground rent, and it still needs to be understood and disclosed.

Northern Ireland and Scotland: quick context

• Northern Ireland: Ground rent is still common under long residential leases, but many homeowners may be able to redeem (buy out) the ground rent under the Ground Rents (NI) Act 2001.
• Scotland: Scotland doesn’t work like the modern E&W leasehold model for most homes. The feudal “annual feu duty” system ended on 28 November 2004, which is why “ground rent” is generally not a typical concept in Scotland in the same way.

What to check

Your legal advisers will guide you through the obligations, but the key points to check are:

• How much is the ground rent (per year)?
• When is it reviewed, and how does it increase? (e.g., fixed increases, linked to inflation, doubles every X years)
• Are there fees for collecting it or for late payment?

Where to find it: your lease, leasehold pack / replies to enquiries, or your solicitor/conveyancer.

Service charge

What is a service charge?

A service charge is payable by leaseholders (home owners) and may also be payable by tenants, depending on the terms of their tenancy agreement. It reflects the share of the cost of maintaining and running the property. What can be charged (and how it's calculated) should be set out in the lease.

It’s most common for:

• leasehold flats
• apartment buildings
• managed estates (even where homes are freehold, there can be estate charges)

What service charge can cover (examples)

Depending on the property, service charges might include:

• cleaning and lighting in communal areas
• repairs and maintenance to the structure (roof, external walls)
• lift servicing (if there is a lift)
• fire safety systems / door entry systems
• gardening/grounds maintenance

Your rights and what you can ask for (England & Wales)

If you pay a service charge, you generally have rights to:

• ask for a summary of how it was worked out and what it was spent on
• inspect supporting paperwork (like invoices/receipts)

What to check

Your legal advisers will guide you through the obligations, but the key points to check are:

• the latest annual service charge figure
• what’s included vs not included
• the last 2–3 years of statements (to spot trends)
• whether there’s a reserve/sinking fund (savings pot for major works)
• any planned major works (roof, windows, cladding, lift replacement)