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The hidden fees of leasehold properties

For a buyer…

Buying a property can be a stressful and expensive process. As buyers, you will not want to receive any nasty surprises in the form of hidden or additional fees you had not budgeted for.

Additional fees are sometimes required in relation to leasehold properties, whether they are apartments or houses.  These fees are often not within the control of your lawyer and can be payable either to your landlord or management company, or both.

It is worth noting the types of fees which may be payable to a management company or landlord, when either purchasing or re-mortgaging a leasehold property:

  • Notice of Assignment and Charge – This is document is served on the management company and/or landlord in accordance with the terms of the lease. This may need to be done when either purchasing or remortgaging a property.  The fee for this is either set out in the lease and represented as a fixed sum, or is described a ‘reasonable’ in the lease and therefore the sum to be paid can be discretionary.
  • Certificate of Compliance – There may be a provision in the property register at the Land Registry, which restricts the property from being either remortgaged or transferred unless a certificate of compliance has been obtained. The management company will in these situations be required to issue a certificate and are able to charge an administration fee in relation to this.  The management company can dictate the fee to be paid for this, on this basis that this is reasonable.
  • Membership Application Form – Depending upon the constitution of the management company, there may be a requirement to become a member or a shareholder of the company.  Again, a fee can be charged by the management company in relation to this, and again must be reasonable.
  • Deed of Covenant – The lease may require you as the buyer, to enter into a deed of covenant confirming you will comply with the lease provisions. Again, this may either be a fixed fee as set out in the lease, or described as reasonable.

Please also remember that a proportion of service charge and ground rent may be payable upon the purchase of the property.  Your lawyer will send these details through to you prior to your moving date and will usually include these in your completion statement.

For a seller…

As a seller, you will usually be responsible for the fees for obtaining the management company pack.  The pack includes information such as the service charge accounts, future major works to be undertaken to the property, any breach of the lease, insurance details and other information.  The cost of this pack can vary widely and is different depending upon the management company involved.


It is important to remember that your lawyer will not have detailed information on the level of the fees mentioned, until the transaction is underway and they have the relevant information as set out in the lease or the management company have sent this information on.

As a buyer, the estate agent may have further information in connection with the level of service charge and ground rent on the property, and it is worth asking these questions prior to an offer being made.

As a seller, it may be worth contacting your management company prior to a sale being agreed in order to check the cost of the management pack.  At least this way, you may have the opportunity to budget in advance for the cost of it.

Nicole Chrisham - solicitor - Residential Property