What are Apportionments in Conveyancing: A Fair Division of Property Costs

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Key Takeaways: 

• Apportionments in conveyancing refer to the division of ongoing property costs between the buyer and the seller so they only pay for their period of ownership. 

• The completion statement details the apportionments in conveyancing that include council tax (or business rates), leasehold property charges (service charges, ground rent), insurance payments and maintenance costs. 

• The Standard Conditions of Sale (SCS) govern the apportionments in conveyancing contracts in England and Wales. It outlines the conditions and how costs are divided between the buyer and seller. 

• Accurate apportionments reduce disputes after completion and ensure a clean transfer of property ownership. 

• The completion date determines the period of ownership between the buyer and seller. It is a crucial factor when calculating the division of costs between both parties. 

• The conveyancing solicitor is responsible for calculating apportionments and detailing them in the completion statement. 

What are Apportionments in Conveyancing? 

Apportionments in conveyancing involve the calculated division of costs between a buyer and a seller for expenses incurred during a transfer of property ownership. 

Apportionments are a crucial part of the conveyancing process. It involves fairly dividing all financial obligations related to the transfer of property ownership between the buyer and seller. The conveyancing solicitor ensures that each party will only pay based on the respective period of ownership, which is determined by the completion date. 

Among the expenses that will be divided are council tax (or business rate for commercial properties), leasehold-related expenses (e.g. ground rent, service charges), insurance premiums and maintenance costs. 

Why are Apportionments Important in Conveyancing 

Assume that a seller of a leasehold property paid the annual service charge at the beginning of the year. If the property is sold in July, what happens to the service charge the seller paid for the months of August to December? 

The apportionments in conveyancing will take care of this issue and any other payments made for the council tax, insurance premiums and other maintenance costs. It ensures both buyers and sellers pay their fair share of financial obligations. 

A proper apportionment is necessary to prevent disputes because it ensures transparency through the completion statement. It eliminates confusion while keeping the process legally and financially accurate. 

The Standard Conditions of Sale 

Apportionments in conveyancing are governed by the Standard Conditions of Sale (SCS). This outlines the conditions of how and when related costs are divided between the buyer and seller. This is usually incorporated in most conveyancing contracts in England and Wales. 

According to the SCS, the completion date is the dividing line for all apportionments.  

• The seller is financially responsible for all charges and liabilities up to the day before the completion date. 

• The buyer is financially responsible for all charges and liabilities from the day of completion and beyond. 

If the seller overpaid, the buyer will need to reimburse the amount when settling the final costs of the property purchase. 

Types of Apportionments During the Conveyancing Process 

Property transactions differ, which means there would be different ongoing financial liabilities as well. Here’s a list of apportionment types that you might encounter when you buy or sell a property. 

Council tax or Business rates 

Residential properties pay council tax while commercial properties pay business rates. Sometimes, property owners choose to pay this annually to get it out of the way, only to decide to sell the property in the middle of the year. 

If the property involved changes ownership in the middle of the tax year, the buyer has to reimburse them for the portion of the year after completion. So, if the seller paid for a full tax year (April to March) and the buyer becomes the new owner by October, the buyer will need to reimburse the tax paid for the period from October to March (6 months). 

Leasehold property charges 

Leasehold property transactions have a few expenses that need to be divided upon completion. 

The first is the ground rent. This is paid to the freeholder who owns the land. Again, if the seller paid the ground rent in advance, the buyer has to pay the period after the completion. 

The second is the service charge. This covers the cost of maintenance for communal areas like hallways, gardens, roofs, and lifts, as well as building insurance. These are usually billed annually or biannually, so buyers need to reimburse the seller for any payments made in advance, at least for the period after the completion date. 

Make sure the reconciliation statement is also considered when negotiating the apportionment. This statement is released by the management company of the leasehold property after the actual expenses have been made. This will protect the buyer if the service charge estimate turns out to be too low, requiring the buyer to cover the entire shortfall (even for the time when the seller was still the owner). If the reverse happens and a refund is made, the seller can be assured that they will get back the amount they paid. 

Insurance premiums 

This refers to the building insurance for freehold properties. For leasehold properties, this is usually included in the service charge. 

If the seller has already prepaid the policy for a year, the buyer must reimburse the unused portion based on the completion date. Ensure the existing policy is clear, as some buyers prefer to obtain their own insurance coverage from the date of completion onward. 

Maintenance costs 

This is usually applicable to freehold properties with shared areas like access roads or communal facilities. These require maintenance funds handled by the management company. 

If the seller paid in advance, the buyer will have to reimburse the amount that covers the period after the completion date. 

This also covers advance payments made to tradespeople such as gardeners, window cleaners, etc. 

How to Calculate Apportionments 

Calculating apportionments is handled by the conveyancing solicitor, who will outline everything in the completion statement. 

The role of conveyancing solicitors 

Your conveyancing solicitor will: 

• Review all relevant taxes, ground rent and service charges. 

• Confirm all payments and the dates they were paid. 

• Calculate apportionments based on the agreed completion date. 

• Include all relevant apportionment data in the completion statement. 

The completion statement has to be as transparent and balanced as possible. Otherwise, a dispute might delay the property transaction. 

Steps to calculate apportionments 

Here’s the typical calculation process that the conveyancing solicitor will go through. 

1. Identify the charges and period covered (e.g. the Service charge is £1,000 over a 12-month period of January 1 to December 31 2025) 

2. Confirm the completion date (August 1) 

3. Determine the daily rate (£1,000 / 364 days = £2.74) 

4. Compute the buyer’s and seller’s shares from the completion date onwards 

• Seller: January 1 to July 31 is 212 days 

• Buyer: August to December is 152 days 

5. Calculate the apportionment due 

• Seller: £2.74 x 212 days = £580.88 

• Buyer: £2.74 x 152 days = £416.48 

Common Apportionment Complications 

Some property transactions make apportionments in conveyancing more complicated and would require solicitors to be careful with the calculations. Among these situations are: 

• Mid-cycle payments. When the completion happens in the middle of the year, the seller may not have received the details of any annual payments they’ve made (e.g. service charge for leasehold properties). The solicitor might have to estimate the amount owed by the buyer and seller and hold the funds in escrow until the final figures are confirmed. 

• Delayed charges. Sometimes, leasehold management companies issue revised or backdated invoices or billing statements after the completion date. In these cases, conveyancers usually include a “balancing clause” in the contract so the buyer and seller can claim adjustments after the final costs are provided. 

• Multiple ownership. If the property transaction involves multiple property owners over a single tax season or service charge, records must clearly show how much each owner should share in the payment. 

Tips to Keep Apportionments Accurate 

Apportionments are mathematical in nature, which means they should be a straightforward process. However, it should be done with caution to ensure accuracy and fairness in the division of costs. This requires all parties to: 

• Review the completion statement. Always double-check the apportionments listed before signing. 

• Pay attention to non-refundable costs. Some disbursements can’t be refunded even if the property transaction falls through. Ask the solicitor to explain what fees are non-refundable. 

• Remember that division is based on time ownership. It’s not a 50/50 split of costs between the buyer and seller. The completion date determines the time ownership, which dictates the cost each party must pay. 

• Clarify leasehold terms. Leasehold property transactions should confirm how and when ground rents or service charges are billed. This will allow the solicitor to include a clause that allows the buyer and seller to claim adjustments once the final costs are confirmed. 

Keep the Property Transaction Fair and Transparent 

Apportionments are just one part of the conveyancing process, but they are crucial for keeping the property transaction fair and transparent. It ensures all parties pay only their rightful share, nothing more or less. 

With property transactions involving several payments and fees, having a clear breakdown and fair division of payments will reduce disputes. It also ensures a clean transfer of property ownership. 

Whether you’re buying or selling a property, make sure your conveyancing solicitor takes the time to explain how apportionments are calculated. You need to understand so that it is reflected in the completion statement, so you know what to expect. 

At Muve, we are committed to providing a fast and transparent conveyancing process. We combined a digital-first approach and local expertise to ensure all appropriations, disbursements, documents and completion details are handled with legal accuracy. 

Make your move with confidence by working with us. Get a free conveyancing quote in just one minute and start your stress-free property transaction now. 

FAQs: Apportionments in Conveyancing in the UK

Do apportionments differ for property sales in London and other parts of England and Wales?

No, the method is the same regardless of where you buy or sell a property. Apportionments are governed by the SCS (Standard Conditions of Sales) and the calculation method is constant. The calculation will always rely on the completion date to determine how much the buyer or seller will pay. 

The difference in apportionments is whether the property transaction is more complex, such as leasehold properties that include ground rent and service charges. In high-density cities like London, one would expect a higher proportion of leasehold units compared to freehold properties.

Who is responsible for the final apportionment calculation?

The initial apportionment calculation comes from the seller’s solicitor as they hold the payment information for the council tax, insurance premiums and leasehold charges, if any. The buyer’s solicitor will review and verify the list and will work together with the seller’s solicitor to ensure the figures are correct before the completion happens. 

Is there an online calculator for conveyancing apportionments?

There are specific online calculators for apportionments in conveyancing, but you need the right information to be confident they will give you the correct answers. You can use this to give you an idea of the costs you have to face before the completion date. However, the final figures will have to come from the completion statement prepared by the conveyancing solicitor. 

Are service charge apportionments calculated differently in England versus Wales?

No, the calculation process is the same, regardless of whether the leasehold property involved is in England or Wales. Of course, the service charges will depend on the specific management company handling the leasehold property. But the completion date that determines the cut-off of the division of costs is the same.