If you own a flat in England or Wales, you almost certainly own it on a leasehold basis. That means a freeholder or managing agent in the background, accounts the buyer's solicitor will pick apart, and a service charge that can make or break a buyer's budget. None of this needs an estate agent, but you do need to understand it well enough to answer questions with confidence.
This guide covers the money side: service charges, reserve funds, major works and how costs are split on completion.
What Your Service Charge Actually Pays For
The service charge is your share of the cost of running the building. Your lease sets out what can be charged and how your share is calculated, usually as a fixed percentage or a proportion based on floor area.
Typical items include:
- Buildings insurance for the whole block
- Cleaning and lighting of communal areas
- Lift maintenance, door entry systems and fire safety equipment
- Gardening and grounds upkeep
- Managing agent fees
- Contributions to a reserve (or "sinking") fund
Buyers want to know whether the figure is reasonable, whether it's been rising, and whether a big bill is coming.
Budgets, Actuals and Balancing Charges
Most blocks work on an estimated budget paid in advance, with accounts finalised at year end. If actual spending was higher than the budget, leaseholders get a balancing charge. If it was lower, there may be a credit.
A balancing charge for a year you owned the flat can land after you've moved out, which conveyancers handle through a retention.
Reserve Funds: A Selling Point or a Warning Sign
A healthy reserve fund shows the building has been saving for roofs, decoration and lifts. A tiny reserve in an older block suggests leaseholders will be asked to pay in one go when work is needed.
If the balance is strong, mention it in your listing. If it's low, have the figures ready rather than letting the buyer's solicitor discover it weeks in.
Major Works and Section 20 Notices
If the landlord plans works that will cost any single leaseholder more than £250, they must consult leaseholders first under Section 20 of the Landlord and Tenant Act 1985. That process involves formal notices, estimates and a chance for leaseholders to comment.
If you've received a Section 20 notice, it will appear in the management pack, so your buyer will find out. The question is who pays.
Who Pays for Works Already Planned?
There's no automatic rule. It's a matter for negotiation, and common outcomes include:
- You pay before completion if the bill has already been issued
- A price reduction reflecting the expected cost
- A retention held back from your sale proceeds until the final cost is known
- The buyer takes it on with the price reflecting that
The earlier you raise it, the less likely it is to derail the sale late on.
The Management Pack and What It Costs
Your conveyancer will request a management pack (often using the LPE1 form) from the managing agent or freeholder. It typically covers:
- Current service charge and ground rent amounts
- The last three years of accounts
- Current year budget
- Reserve fund balance
- Planned or proposed major works
- Any arrears on your account
- Insurance details and any disputes
The seller usually pays, and fees vary widely, often a few hundred pounds. Turnaround can take weeks, so ask your conveyancer to order it as soon as you accept an offer.
Selling privately gives you an advantage here: you can dig out recent accounts and the current budget yourself and share them with interested buyers early. When you list on Keyzee, put the annual service charge and ground rent in your listing so serious buyers can factor them in before they view.
Apportionment on Completion
When the sale completes, service charges and ground rent are apportioned between you and the buyer, day by day. If you've paid the service charge in advance for a period that runs past completion, you'll get a refund for those days via the completion statement. If you're behind, the shortfall comes out of your proceeds.
Retentions for the Year-End Accounts
Because the final accounts for the current year won't be ready at completion, the buyer's solicitor may ask for a sum to be held back from your proceeds. Once the accounts are finalised, any balancing charge is paid from the retention and the rest is returned to you. Ask your conveyancer how much they expect and how long it's likely to be held, so you can plan around it.
Ground Rent and Lease Length
These aren't service charges, but buyers will look at them in the same breath.
- Ground rent: most new long leases granted since mid-2022 carry a peppercorn (zero) ground rent. Older leases may have rent that doubles at intervals, which some lenders treat with caution.
- Lease length: once a lease drops below around 80 years, extending it becomes more expensive and some buyers and lenders get nervous. Reforms under the Leasehold and Freehold Reform Act 2024 aim to make extensions cheaper, but check with your conveyancer which parts are actually in force when you sell.
If your lease is short, consider getting an extension valued before you list, or starting the statutory process so the claim can pass to your buyer.
A Note for Scotland and Northern Ireland
Leasehold flats as described here are mainly an England and Wales arrangement. In Scotland, flats are usually owned outright, with shared costs handled through a property factor. Northern Ireland has its own mix. Being open about shared costs matters everywhere.
Getting Ready to Sell
Before you list, gather:
- Your lease, or at least the key clauses on service charges and ground rent
- The last three years of service charge accounts
- The current budget and your latest demand
- Any Section 20 notices or correspondence about major works
- Your managing agent's contact details and their management pack fee
Having this to hand lets you answer buyer questions on the spot, price realistically and keep your conveyancer moving. It's the sort of preparation an agent would charge for, and you can do it yourself in an afternoon.
Ready to List Your Flat?
Selling a leasehold flat yourself is very manageable once you understand where the money goes and what buyers will ask. If you're ready to get started, create your listing on Keyzee and sell your flat on your own terms, without paying agent commission.