What should I ask before buying a leasehold flat?

The specific questions that decide whether a flat is a good buy or an expensive mistake — lease length, ground rent, service charge history, planned works, building safety and the restrictions in the lease.

Difficulty: intermediate
Time: 14 min
Read: 5 min

Short answer

Ask for the unexpired lease term, the ground rent and any escalation clause, three years of service charge accounts, the reserve fund balance, any planned major works and any consultation notices served, the building safety position for taller blocks, and the lease's restrictions on pets, flooring, subletting and alterations. Insist that your conveyancer reports on all of them before exchange.

A leasehold purchase has a whole layer of enquiry that a freehold purchase does not, and it is a layer buyers routinely leave entirely to the conveyancer. That is a mistake, because the conveyancer reports on what they are asked about, and the questions that matter most to how you will actually live in the flat — pets, flooring, whether you can let it out — are ones only you know to ask.

Step by step

Get the unexpired term and write it down.Not the original term — the years remaining. Below the mortgage-friendly range, lenders become cautious and the cost of extending rises sharply. If it is short, price the extension before you offer, not after.
Ask about ground rent and any escalation.How much, when it is reviewed, and on what basis. Doubling clauses and rents linked to an index can make a flat unmortgageable and unsellable. Ground rent on most new residential leases has been reduced to a peppercorn by reform, but existing leases are a different matter — ask specifically.
Ask for three years of service charge accounts.Not the current demand — the accounts. You are looking for the trend, the proportion spent on management fees, whether there is a reserve fund, and whether the accounts are properly prepared.
Ask about the reserve fund.How much is in it, what it is earmarked for, and whether it is held on trust. A healthy reserve fund is a good sign; an empty one on an older building means the next roof is a bill rather than a plan.
Ask about planned major works and any consultation.Whether any statutory consultation notice for major works or a long-term agreement has been served or is contemplated. A consultation already under way means a bill is coming, and who pays it is a matter for negotiation before exchange.
Ask about building safety for taller buildings.For buildings above the relevant height or storey threshold, ask what safety assessments exist, whether there are known defects, what remediation is planned, and how it will be funded. Leaseholder protections exist for defined categories of leaseholder, and your conveyancer should report on whether they apply to you.
Read the lease's restrictions yourself.Pets, flooring, subletting and short-term letting, business use, alterations, noise hours, storage in common parts, and what needs consent. These are the terms that govern daily life and your conveyancer will only flag what you have said matters to you.
Ask who insures the building and what the excess is.Usually the freeholder or management company insures and recovers the premium through the service charge. Ask for the policy schedule, the premium, the excess and any commission arrangement.
Find out who actually manages it.Freeholder, a residents' management company, or a managing agent — and which of them you complain to. Ask whether the block has considered Right to Manage, which usually surfaces any history of dissatisfaction.
Expect to pay for the management pack.The seller obtains a leasehold information pack from the freeholder or managing agent, and they charge for it. It routinely delays sales because it is requested late. If you are the buyer, ask early whether it has been ordered.
Ask about arrears and disputes.Whether the seller owes service charges, whether any leaseholder in the block is in dispute, and whether there is any tribunal application ongoing. Unpaid service charges can, in principle, put a lease at risk.

Tips

Ask for three years of accounts, not one demand. The trend is the information.
Get the unexpired lease term in writing at viewing stage. It decides whether the flat is worth investigating.
Write down the three lease terms that matter most to you and give them to your conveyancer as specific questions.

Common mistakes

Leaving the lease entirely to the conveyancer — They report on the legal risks. The terms that decide how you live in the flat — pets, flooring, letting — only get flagged if you say they matter.
Treating the current service charge as the running cost — It is one year. The accounts, the reserve fund and any planned works are what tell you what the flat will actually cost.

If it doesn't work

The management pack is taking weeks

Cause: The freeholder or agent is slow and charges for it — Fix: Ask the seller to chase and ask when it was ordered. This is the single most common cause of delay in a leasehold sale, and ordering it at the point of listing removes it.

The service charge has doubled in three years

Cause: Rising insurance, a management change, or works being caught up — Fix: Ask for the reason in writing and for the accounts. A one-off catch-up is different from a trend, and the answer should change your view of the running cost.

The lease prohibits something you need

Cause: Pets, flooring, or letting restrictions — Fix: Ask whether consent is available and on what terms, in writing, before exchange. Buying and then asking is the expensive order.

Questions people ask

What lease length is safe?

There is no single number and lenders differ, but the market becomes markedly more cautious as a lease approaches and passes the point at which an additional valuation element applies. Ask your broker what your specific lender requires before offering.

Is a share of freehold better?

It removes an outside landlord and makes lease extensions much simpler, and it makes the management your responsibility along with your neighbours'. Ask the same service charge and reserve fund questions, because the building still costs the same to run.

Who pays if major works are already agreed?

That is a matter for negotiation. A buyer who knows a bill is coming can ask for a retention or a price reduction. A buyer who finds out afterwards has no leverage at all — which is why the question has to be asked before exchange.

Can I convert a leasehold flat to freehold?

Not individually. The route is collective enfranchisement with the other flat owners, or a lease extension for the lease length problem alone.