Can I Get A Service Charge Refund When Selling?

service charge refund when selling

Service charges for leasehold properties are usually paid in advance, prior to work being carried out. This can be a pain if you have just paid the latest instalment and the sale of the property then goes through, getting a leasehold service charge refund when selling is possible, but you often have to jump through a few hoops to get there.

In this article, we take a look at if you can get a service charge refund when selling, and the best way to approach this.

Can I Get A service Charge Refund When Selling

If you have overpaid your service charge, you will be due back a refund once your solicitor has worked out the apportionment of service charge. They will rely on proof of payment from the freeholder or managing agent in order to refund it. The funds will be taken off your total sale price.


The first process to getting your service charge refund is by a term called undertaking which is carried out by your solicitors. This is usually always requested by the purchasers solicitors on a leasehold sale.

An undertaking from the vendors solicitor ensures that the debt will be cleared on completion, out of the completion money, this will include looking for arrears of ground rent and service charge that are outstanding with the freeholder or managing agent.

During this process, your solicitor will request a number of things from your freeholder/managing agent that will help them to work out the apportionment of service charge and ground rent.

  •  They will request apportionments. This is the amount of money that is owed or due back as a refund from the date of completion.
  • An updated statement in relation to the service charges, with undertaking to pay all service charges on completion.

Once this process has been carried out and you are ready to exchange, you will receive a statement of account regarding the sale of the property. This will include the sale price and the apportionment of ground rent and service charges, the total adjustments will be numbered underneath and either taken off or added onto the total sale price. This is where you will be able to identify whether you are getting a service charge refund or not.

Retention Fee

During the undertaking stage, it is quite common for the purchasers solicitors to request a retention fee. This is requested to be held on account until the management company accounts for the next year have been finalised. A retention fee can vary, I know of leaseholders who had to leave a retention of £500 and £100, mine was £250.

For example, if the new year accounts were more than expected, they would use this retention fee to help balance it out. It’s much about protecting the new buyer than anything else.

Terms and conditions on the retention fee and how long it is kept for should be relayed to the seller from the solicitor. They are meant to give you notice once action has been made, i.e the retention fee has been used.

What If You Have Unpaid Service Charges?

If you have unpaid service charges, unfortunately there’s no avoiding it. This will be made apparent to the purchaser when your freeholder completes the LPE1 form and management pack. Mortgage lenders are incredibly wary on substantial arrears and will often not release the funds until they have been cleared. If these arrears are not settled before you exchange and purchase, the debt will potentially be placed at your door, and you could be liable to pay it.

Any unpaid service charges will be identified during the undertaking process and all debts must be settled before the sale can go through. Any debts are deducted from the total sale price at the point of completion, you can also choose to pay up front before the sale goes through, but having your solicitors take the balance from your sale is a much cleaner, and neater way of doing it.

Most service charges are payable in advance, so unless the service charge invoice for 6 months in advance has just gone out and you’re about to move any day, then it makes sense to wait until the apportionment is worked out.

My Experience Getting A Service Charge Refund When Selling

When money is involved with managing agents and freeholders, you always know it’s going to be difficult trying to get any back. I had an interesting situation because I owed service charges (I’d been purposely withholding because I desperately didn’t want to overpay if I was moving imminently), I had paid ground rent 6 months in advance and I owed around £500 for building insurance that wasn’t paid because all of the leaseholders had decided to withhold payment until a reasonable explanation was given as to why a series of quotes were not provided to us in line with the lease. (I knew I would have to end up paying all of this).

As mentioned, during the stage between exchange and completion your solicitor will start a process called undertaking. This involved the managing agents who took payment for service charges, and my freeholder for ground rent. I had to provide proof of payment to my solicitor that ground rent was paid in advance and the managing agents provided an up to date statement of my accounts outlining what was owed.

With this they worked out the apportionment. Because I actually ended up owing just under £1,000, this was added onto my fees and taken from my sale which was then passed across to the managing agent when the sale completed. I was refunded the excess ground rent charge from my fee, so I didn’t end up noticing anything.

Further to this, something I was not aware of which happened was the purchasers solicitors requested to hold £250 as a retention fee until the management company accounts for the next year had been finalised. Now, I couldn’t believe this after I had forked out enough money to get this leasehold sale through, and knowingly that I will probably never see this £250 again. This seems to be quite common practice in leasehold sales, but I was never provided with the terms and conditions of this and when it might be returned to me. I was at the stage that I literally didn’t care, I just wanted the sale to go through at this point and vowed to never buy leasehold again!

In Summary

If you know you are due a service charge refund when selling, then it should be worked out accordingly during the apportionment stage.

Just ensure that you keep proof of when payments have been made and that your managing agent/freeholder provides up to date accounts information.

Do bear in mind that a retention fee may be added on which could eat into your service charge refund. Hopefully this is something you may get back at a later stage though…

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Nicole Sage

Nicole Sage is the founder of Sleek-chic Interiors and is a highly experienced interiors writer and skilled home renovator who has a passion for all things design. She has been featured as an authority at Pinterest, Ideal Home, Daily Mail and in countless other interviews. For 8 years, Nicole has written, observed key interior trends, renovated and undertaken interior short courses at the renown KLC school where she has gained her grounding interior design principles. With a keen eye for detail and a love of creativity, she shares her expertise on the latest interior trends, practical DIY tutorials, and styling inspiration to help others transform their homes into stunning spaces. With a commitment to delivering informative and engaging content, Nicole inspires and empowers readers to explore their own unique sense of style and create beautiful, personalised interiors. Contact her at for interiors advice, colour questions and any commentary.

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