What Is A Service Charge & What Is Ground Rent?

In England the vast majority of the property is leasehold. That is because in England leaseholds are almost the same as freeholds and can be renewed anytime you want without having to negotiate with the freeholder.

The way that apartments are set up in England is to be able to share the land, and the rights to the land give all owners an equal share.

More importantly, it also means that there is a management company keeping the shared spaces retained to the highest standards, keeping your asset value high.

The annual cost of this should be cheaper than if you had a house and the repairs that come each year, this has to be checked by someone like Baron & Cabot, too high and it can take away from our profits, too low and it can mean the property may not be maintained very well.

This annual payment is called a service charge and tends to be anywhere from £50-£150 per month depending on what sort of amenities there are – (swimming pools and elaborate spaces cost the most).

The ground rent is what is paid to the company responsible for the building. This is fixed to 0.1% of the property value so if the property was £200,000 then the ground rent would be £200 per year maximum.

 

Picture of Mark Pearson

Mark Pearson

With city planning and investment in his family, Mark went on to study property and economics at university before going on to start his RICS training. After working as a surveyor he went into setting up a brokerage hoping to make the investment process more transparent for investors.

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