Leasehold and ground rent estimator
A leasehold flat costs more than the mortgage. Ground rent and service charge are on top, and they matter when you budget. This adds up the yearly and monthly leasehold outgoings.
How the outgoings add up
| Item | Per year | Per month |
|---|---|---|
| Ground rent | £350 | £29 |
| Service charge | £1,800 | £150 |
| Other lease costs | £150 | £13 |
| Total | £2,300 | £192 |
Why leasehold costs need their own line in the budget
Mortgage calculators stop at the loan, but a leasehold flat carries running costs a freehold house does not. Ground rent is usually the small part. The service charge is the one that moves your monthly budget, because it funds real work on the building and rises when that work is expensive. Adding both to the mortgage gives the true monthly cost of living there, which is the number that should drive an affordability decision.
Worked example
Take a flat with £350 ground rent and a £1,800 service charge, plus £150 of other lease costs. The yearly total is £2,300, which is £192 a month on top of the mortgage. Over a five-year fixed term that is more than £11,500 before any increases, so it is worth asking for the last few years of service-charge statements before you buy.
Reforms in progress
The rules are changing. Ground rent on most new long residential leases has already been cut to a peppercorn, effectively nothing, and the government has stated an intention to address ground rents on existing leases as well. Wider leasehold and commonhold reform is still passing through Parliament, so the treatment of existing ground rents is not final. The figures here reflect what a lease charges now, not a settled future position.
Common questions
What is the difference between ground rent and service charge?
Ground rent is a payment to the freeholder for the land the building sits on, often a small fixed sum. The service charge is separate and much larger, covering the upkeep of the building: cleaning, insurance, repairs and any managing agent. Both are set out in your lease.
How much is a typical service charge?
It varies widely, from a few hundred pounds a year for a small block to several thousand for a flat with a lift, concierge or communal grounds. In this example a £1,800 service charge plus £350 ground rent works out at £192 a month once other lease costs are added.
Are the ground rent rules changing?
Yes. Ground rent on most new residential leases has already been reduced to a peppercorn, effectively zero, and the government has said it intends to tackle existing ground rents too. Reform is still moving through Parliament, so the position for existing leases is not settled. Treat any figure here as the current cost, not a guaranteed future one.
Can the service charge go up?
Yes, and it often does. Service charges reflect the actual cost of running the building, so a major repair such as a new roof or works to the exterior can push them up sharply for a period. You have a right to be consulted on large works and to challenge charges you think are unreasonable at the tribunal.
Do I pay ground rent and service charge monthly?
It depends on the lease and the managing agent. Many charge annually or in two half-yearly instalments rather than monthly. The monthly figure here is the annual total divided by twelve, which is useful for budgeting even when the actual bill arrives less often.