An overwhelming majority of leaseholders, nearly 90%, regret purchasing their homes, according to a recent survey by the estate agent membership body Propertymark. The poll of 1,200 leaseholders found that 93% would not purchase a leasehold property again, with many indicating they would only consider it if no other options were available.
Leasehold properties have faced significant challenges in recent years, including issues with unsafe cladding and rapidly increasing service charges. These problems have made it difficult for some homeowners to sell their properties, particularly in markets with limited demand for apartments.
Surging Service Charges and Sale Difficulties
The Propertymark report revealed that 86% of leaseholders experienced an increase in service charges over the past two years, with 62% reporting an increase exceeding 21%. Alarmingly, 70% of leaseholders stated they never received clear explanations for these increases, and nearly nine in 10 felt the charges did not reflect actual cost rises. Average annual service charges range from £1,525 for the least expensive 10% of buildings to £8,680 for the top 10%, based on analysis of over 117,000 homes.
Nearly 60% of leaseholders reported that service charges significantly impacted their ability to sell their property. Furthermore, 89% found it difficult to challenge what they deemed unfair service charges. Estate agents surveyed by Propertymark indicated that selling leasehold homes is becoming increasingly challenging, with over 78% having removed at least one leasehold property from the market in the last two years due to lack of sales. The primary obstacles cited by agents include high service charges, escalating ground rents, and issues with short lease terms.
Proposed Reforms and Future Outlook
Government reforms are underway, though significant changes are not expected for some time. The draft Commonhold and Leasehold Reform Bill is undergoing pre-legislative scrutiny and is slated for introduction to Parliament in Autumn 2026, with potential enactment in 2027 or 2028. If passed, this bill aims to simplify the conversion of leasehold ownership to commonhold, granting homeowners a greater stake and say in their building's management and costs. It also proposes to abolish the threat of forfeiture, where freeholders can reclaim a property due to unpaid service charges or ground rent.
The bill includes a proposal to cap ground rents at £250 annually, with a long-term plan to eventually abolish them entirely over 40 years. Additionally, the Leasehold and Freehold Reform Act 2024, passed under the previous Conservative government but not yet fully implemented, aims to make extending leases cheaper and easier while banning leasehold houses.
However, Nathan Emerson, chief executive at Propertymark, expressed concern that the planned reforms may not be sufficient for existing leaseholders. He noted that the 40-year timeline to scrap ground rents is double previous government promises and that legislation to regulate unreasonable service charges, a major barrier to sales, is still pending. Emerson warned that a rapid transition to commonhold is unrealistic, leaving hundreds of thousands of leasehold homeowners without meaningful change for decades.
The difficulties in selling leasehold properties, which predominantly include flats, are also affecting the broader housing market. Flats have historically served as an entry point for first-time buyers. If these properties become difficult to sell, it can hinder homeowners' ability to move up to houses, potentially impacting the saleability of houses as well. Propertymark's observations suggest that as flats take longer to sell and are sold at lower prices, they are being effectively removed from the market, disrupting their role as a stepping stone for buyers.