Service charges and ground rent: what to check before you buy a flat

Before you offer on a leasehold flat in Manchester, treat the service charge and ground rent as part of the price. Ask for the lease, three years of service charge accounts, the reserve fund and any section 20 notices already served. The statutory protections are real, but they only help if you know what the building is committed to.

What a service charge legally is

Section 18(1) of the Landlord and Tenant Act 1985 defines a service charge as "an amount payable by a tenant of a dwelling as part of or in addition to the rent" for services, repairs, maintenance, improvements, insurance or management, "the whole or part of which varies or may vary according to the relevant costs". A fixed charge that cannot vary falls outside it, and loses the protections below.

The lease decides what can be charged; the Act limits what is recoverable. Section 19(1) is that limit: costs count "only to the extent that they are reasonably incurred", and where spent on services or works, "only if the services or works are of a reasonable standard". Where you pay on account, section 19(2) allows "no greater amount than is reasonable".

Section 20: the consultation thresholds

Section 20 caps what a landlord can recover for qualifying works and qualifying long-term agreements unless consultation requirements are met or dispensed with. The thresholds sit in the Service Charges (Consultation Requirements) (England) Regulations 2003. Regulation 6 sets the works trigger at an amount resulting in "the relevant contribution of any tenant being more than £250". Regulation 4 catches a long-term agreement where an accounting period produces a contribution "being more than £100". Section 20ZA(2) defines such an agreement as one "for a term of more than twelve months" — a multi-year lift or agent contract.

Without consultation your contribution is capped at the threshold figure; the excess is not recoverable. The landlord can ask the First-tier Tribunal for dispensation under section 20ZA(1), granted "if satisfied that it is reasonable to dispense with the requirements" — common, but not automatic, and decided after the event.

Your information rights

Under section 21 as it remains in force, "A tenant may require the landlord in writing to supply him with a written summary of the costs incurred"; section 21(4) requires compliance "within one month of the request" or six months after the accounting period ends, whichever is later. Section 22(2) then lets you require facilities "for inspecting the accounts, receipts and other documents supporting the summary", within six months of obtaining it.

Under section 25(1) it is "a summary offence for a person to fail, without reasonable excuse, to perform a duty imposed on him by section 21, 22 or 23". GOV.UK puts it plainly: "Your landlord must give you this information - it’s a criminal offence if they do not."

The 18-month rule

Section 20B(1) is easy to miss. Where the costs "were incurred more than 18 months before a demand for payment of the service charge is served on the tenant", the tenant "shall not be liable to pay so much of the service charge as reflects the costs so incurred". The escape, in section 20B(2), is that the rule does not apply if within those 18 months "the tenant was notified in writing that those costs had been incurred" and that a contribution would follow. Look for old costs in a recent demand.

Ground rent

Under the Leasehold Reform (Ground Rent) Act 2022, section 4(2), "The permitted rent is a peppercorn rent" — "an annual rent of one peppercorn". Section 1(1) catches a lease only where it is "granted on or after the relevant commencement day" and not under an earlier contract, and the commencement regulations fix that day: "sections 1 to 19 of, and the Schedule to, the Act come into force on 30th June 2022" (retirement home leases, 1 April 2023). Section 3(1) bars a landlord from requiring a prohibited rent; an enforcement authority may impose a penalty "not to be less than £500" and "not to be more than £30,000".

Older leases are unaffected. A lease granted before 30 June 2022 can still carry a ground rent that rises on review, and buying it second-hand does not convert it. GOV.UK: "The changes only apply to new leases granted on or after 30 June 2022." Read the review clause, not just the current figure.

A demand must also be served properly. Under section 166(1) of the Commonhold and Leasehold Reform Act 2002 a tenant "is not liable to make a payment of rent under the lease unless the landlord has given him a notice relating to the payment"; the notice "must be in the prescribed form" and must set a date neither "less than 30 days or more than 60 days after the day on which the notice is given". Ground rent never properly demanded is not yet payable.

Challenging a charge

Section 27A(1) lets you apply to the First-tier Tribunal for a determination "whether a service charge is payable and, if it is", by whom, to whom, how much, when and how. Subsection (3) covers costs not yet incurred. You cannot re-open a matter that "has been agreed or admitted by the tenant" (subsection (4)(a)) — but "the tenant is not to be taken to have agreed or admitted any matter by reason only of having made any payment".

The 2024 Act: mostly not yet in force

The Leasehold and Freehold Reform Act 2024 contains service charge transparency reforms. On legislation.gov.uk sections 53 to 58 each carry the note "not in force at Royal Assent, see s. 124(3)", with no commencement recorded. Do not price a purchase on them. Other parts are in force: section 27, "Removal of qualifying period before enfranchisement and extension claims", commenced on 31 January 2025.

What to ask for before you offer

1. The lease — unexpired term, apportionment, the landlord's obligations.
2. Three years of service charge accounts — actuals, not budgets, movements explained.
3. The reserve fund — balance, what it funds, whether held on trust.
4. Planned major works — surveys, asset management plans, cladding issues.
5. Any section 20 notices served — intention, estimates or dispensation.
6. Ground rent — amount, review clause and frequency, form of past demands.
7. Arrears and disputes — building arrears, tribunal proceedings, insurance claims.

Your conveyancer obtains most of this in the management pack. Read it before you commit. See also our guides to buy-to-let checks, EPC ratings and sale timescales, our calculators and our fees.

General information current at October 2026, and not legal or financial advice. Service charge and ground rent liabilities turn on the wording of your particular lease — take advice from a conveyancer.

Unsure what a management pack is telling you? Call Atlas Estates on 0161 710 4510 or come in to 12–14 Midland Street, Manchester M12 6LB. Selling a flat? Start with a valuation.