All about the money: Service charge & Ground rent in Leasehold

25th Apr 2018

At Blocsphere we are not like other managing agents – we don’t cut corners and avoid the subject of money when we’re asked. We offer a no-nonsense attitude when it comes to our service and we are happy to answer any pending questions that our clients may have. So here are some answers to the common questions we get about charges and the purpose of them.


When you purchase a leasehold flat, you obtain the right to live there for a given number of years, this is known as ‘the term’. Ground rent is charged by the freeholder as rent for the land on which the property is built and how the ground rent is increased is known as ‘rent reviews’, the rent reviews may set an exact amount for the increase in rent or a method for agreeing the level of increase. The amount payable, how the ground rent is increased over the period of the term and the frequency of payment will be set out in the lease.


Service charges are monies collected to maintain the structure of the building and common parts and cover the costs of any services provided. These include things such as; cleaning, repairs, lift services, gardening, etc. The lease will say what the service charges cover, when they are to be requested and how they are accounted for. Under the law, the money must be held in a trust by the management agent, residents’ management or the landlord; depending on the lease. The amount that the leaseholder pays will be a portion of the total budget, it will say in your lease the percentage you are responsible for paying and the frequency of payments. If you are unhappy with the amount of service charges you are being asked to pay or the level of service you have received, a leaseholder has the legal right to challenge the service charges in the first tier tribunal.


This is the money collected regularly towards major works that have to happen within the next few years. The money for reserve funds/sinking funds is collected over several years, this is to make sure that there is not a spike in how much the leaseholder is being charged when the works are being carried out. All of this money must be kept in a trust account and the lease will set out what the land lord can spend the money on.


Here at Blocsphere, we’re proud to have transparent management fees which makes us stand out from other managing agents. When you choose us for your block and estate management you won’t find any hidden fees or charges in our estimates, so you can have continued confidence in our service.

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