Buying Property in London: Key Risks to Check Before You Exchange — Leasehold, Service Charges, Off-Plan Deposits, and Contracts

The risks of buying property in London go beyond whether the price will rise or fall. Before reserving, making an offer, or exchanging contracts, buyers need to understand what obligations the tenure and lease leave behind, who bears the cost of management fees and building works, whether the lender’s valuation has actually checked the property’s condition, and how a new-build contract handles delays and exit rights.

For overseas buyers in particular, these risks are not always obvious from the property listing or sales materials — and some cannot be undone once contracts have been exchanged.

This article focuses on the due diligence checks that should happen before exchange on a London or English transaction. It does not repeat the full buying process, and it does not make legal, mortgage, or investment judgements on behalf of any individual property.

Freehold Versus Leasehold: What This Means for Your Ongoing Obligations

Freehold typically includes long-term ownership of the land and property. Leasehold means holding a property interest for the duration of a lease, subject to the fees, maintenance requirements, use restrictions, and transfer terms written into that lease. London flats are commonly Leasehold — buyers should not look only at remaining years; they need to read the full lease and management documentation.

A first round of Leasehold checks can include:

• Remaining lease term, and the process for extending it. Leases with fewer than around 80 years remaining can make a property harder to mortgage or resell — confirm whether the current term is acceptable to your lender before proceeding.
• Ground Rent amount, adjustment mechanism, and payment conditions
• What Service Charge covers
• Reserve fund or major works fund balance and purpose
• Whether any Major Works notice has already been issued or charges remain outstanding
• Restrictions on subletting, pets, renovations, or structural alterations

For regulated long leases granted on or after 30 June 2022, Ground Rent is generally limited to a peppercorn amount, with zero monetary value. However, if you are buying an existing leasehold created before 30 June 2022, the original ground rent terms remain in force — the 2022 reform does not apply retroactively to leases already in existence. A buyer taking over an earlier-dated lease after that date does not automatically bring the old ground rent terms to an end. Remaining lease term may also affect financing and lease extension options — confirm acceptable thresholds directly with your lender.

Service Charges and Major Works: What Documents to Request

Whether service charges can be levied, how they are apportioned, and when they fall due depends first on the lease. Buyers can ask their solicitor or licensed conveyancer to review recent accounts, the current year’s budget, the reserve fund, insurance documentation, management company correspondence, and any Major Works that have been announced, consulted on, or are under way.

In England, if the cost of qualifying works to any one tenant exceeds £250, or a qualifying long-term agreement of more than 12 months costs any one tenant more than £100 per year, a Section 20 consultation is generally required. These two thresholds are not interchangeable.

If the consultation has not been correctly completed, the amount a tenant is required to pay may be limited. However, a landlord may apply to the First-tier Tribunal (Property Chamber) under Section 20ZA of the Landlord and Tenant Act 1985 for dispensation from the full consultation requirements. It cannot be assumed that every unconsulted case will automatically be capped at £250 or £100 per year. Disputes about whether service charges are reasonable or correctly levied may be referred to the First-tier Tribunal (Property Chamber) — whether that avenue applies depends on the nature of the dispute and the relevant procedure.

A Mortgage Valuation Is Not a Home Survey

A Mortgage Valuation is a limited check on property value carried out for the lender’s benefit, primarily to assess lending risk. It is not a building survey commissioned by the buyer to understand the property’s condition.

A Home Survey is instructed by the buyer and focuses on condition, visible defects, and issues requiring further investigation. RICS classifies Home Surveys at different levels; the right level depends on the property’s age, construction type, history of alterations, and visible condition — not simply on price. Buyers should not assume that a lender’s valuation has checked the structure, dampness, roof, common parts, or future repair liability.

EWS1 and Building Safety Act Protections: Two Separate Frameworks

The EWS1 form and the Building Safety Act 2022 leaseholder protections are frequently confused — but they cover different things, and one does not substitute for the other.

An EWS1 form is primarily used for valuation and financing purposes in relation to the external wall system. RICS has made clear that an EWS1 is not a life safety certification for the entire building, and not every building requires one. Whether one is needed, which assessor’s sign-off is acceptable, and whether existing documentation still satisfies the lender’s requirements must be checked against the specific building’s characteristics, current valuation guidance, and the individual lender’s instructions.

The leaseholder protections under the Building Safety Act 2022 are a separate statutory framework. They involve conditions relating to “relevant buildings,” historical safety defects, qualifying leases, and qualifying leaseholders. Qualifying leaseholders may be protected from paying for remediation of external cladding, and certain non-cladding defect costs may be subject to caps and contribution limits.

An EWS1 outcome therefore does not determine whether Building Safety Act protections apply. When buying in a London high-rise or multi-storey residential block, check separately:

1. Whether the building has external wall or historical safety defects
2. Who completed any current EWS1 or external wall assessment and when
3. Whether the lender and valuer require this documentation
4. Whether the property and lease meet the GOV.UK qualifying leaseholder conditions
5. Who is responsible for completed, funded, and still-outstanding works

Off-Plan and New-Build Properties: What to Check Before You Sign

When buying a new-build or off-plan property, whether a reservation fee is refundable depends on the terms of the reservation agreement and any applicable consumer code. Buyers should not assume any cooling-off period or refund arrangement is the same across all developers before reading the specific terms.

Developers may require buyers to exchange contracts within a relatively short period after reservation. Exchange is legally binding — the deposit amount, the consequences of a buyer withdrawing, and how developer delays are handled are all determined by the formal contract.

A long-stop date can be written into a contract to allow the buyer to exit if construction delays reach a defined threshold. However, what constitutes a qualifying delay, how notice must be served, how the deposit is treated, and whether the developer can extend the date must all be confirmed by reading the specific contract terms. For overseas buyers, coordinating completion from abroad adds complexity — confirm how the long-stop date, notice requirements, and any extension rights interact before you exchange. If communication about delays needs to be in writing or through specific channels, clarify this in advance. Sales materials and estate agent representations are not a substitute for independent contract review.

Risks, Documents, and Professional Roles at a Glance

Estate agents can pass on offers and seller or developer information, but they do not replace independent legal review, a Home Survey, or the lender’s own approval assessment.

Questions to Ask Before You Commit

• Is this Freehold or Leasehold? What ongoing costs and restrictions will you take on?
• How have Ground Rent, Service Charge, and reserve fund levels changed in recent years?
• Are there any Major Works that have been announced, consulted on, or are still in planning?
• What level of Home Survey or specialist inspection does this property require beyond the Mortgage Valuation?
• Is an EWS1 actually required? Who signed it off, and does your lender accept it?
• Do Building Safety Act 2022 leaseholder protections apply to this property and lease?
• Under what circumstances is the reservation fee refunded or retained?
• Does the contract include a long-stop date? How are notice, extension, exit, and deposit terms written?
• Before you exchange, are mortgage, legal enquiries, survey reports, and fund arrangements all aligned?

Frequently Asked Questions

Is ground rent always zero for leasehold properties in London now?
Not necessarily. Regulated long leases granted on or after 30 June 2022 generally carry a peppercorn Ground Rent with no monetary value. Earlier-dated leases may retain their original terms. The lease grant date and the full text of the lease are the authoritative source.

If there was no Section 20 consultation, is the service charge automatically capped?
No. The £250 and £100 per year thresholds in England are important, but a tribunal can grant dispensation under Section 20ZA without requiring the full consultation process to be completed. Whether costs are limited depends on the documentation and tribunal outcome in each case.

Does an EWS1 form mean the building is safe?
No. An EWS1 is a valuation and financing document relating to the external wall system, not a life safety certification for the entire building. Buyers still need to check fire risk assessments, remediation plans, statutory protections, and lender requirements separately.

The lender has done a valuation — do I still need a Home Survey?
A Mortgage Valuation is primarily for the lender’s benefit. Its scope is not the same as a buyer’s Home Survey. Whether to commission one and which level is appropriate should be assessed against the type, age, and condition of the specific property.

Does a long-stop date guarantee a full deposit refund if the build is delayed?
Not automatically. How the long-stop date is triggered, what exit rights apply, and how the deposit is handled all depend on the contract. An independent solicitor or licensed conveyancer should review the specific terms before you sign.

Have questions about your specific situation — whether it’s the lease, service charges, the property’s condition, building safety, or the contract? Ask us via Zagdim Ask — share the property type, current stage, and your main concerns, and we’ll help point you to the right information first.

Ready to take the next step? If you need help with lease and contract review, finding a UK property solicitor or licensed conveyancer, arranging a Home Survey, or getting mortgage advice, visit ZDelp to find, compare, and contact relevant professionals.

Sources
GOV.UK – Buying or owning a leasehold home | GOV.UK – Leasehold property: Service charges and other expenses | GOV.UK – How to buy a home | GOV.UK – Building safety leaseholder protections | LEASE – Section 20 consultation | RICS – Cladding External Wall System (EWS) FAQs | RICS – House surveys

Validity notice: Information based on England official and professional body sources as of 23 July 2026. Leasehold reform, building safety guidance, EWS1 requirements, lender policies, and new-build contract arrangements may be updated — check the latest guidance before making any transaction commitment.