Propertymark is calling for the government to accelerate reforms designed to make leasehold properties easier to buy, own and sell, arguing that the current process is taking too long.
The industry body for estate and letting agents says existing leaseholders need more immediate changes to address rising service charges, delays when selling properties and unresolved building safety issues.
Its latest research, which is based on responses from more than 1,200 leaseholders and 200 Propertymark members, found that 86% of leaseholders had seen their service charges increase during the previous two years, with 89% saying it was difficult to challenge charges they considered unfair.
Propertymark members reported examples of annual service charges increasing from around £1,000–£2,000 to £3,000–£4,000.
Making leasehold sales easier
Around 74% of agents surveyed identified high service charges as a major barrier to sales, with more than 78% reporting that they had taken at least one leasehold property off the market because they were unable to sell it.
In addition, the extra information required for a leasehold transaction, including details about the lease, service charges and management of the building, can add to the time taken to complete a sale.
40% of Propertymark members said it could take more than 15 days, and sometimes months, to obtain this information, with only 17% typically receiving it within one to five days.
Building safety is another issue highlighted by the research, particularly for flats in blocks with historic fire-safety problems.
What reforms are already planned?
Changes to the leasehold system have been in the pipeline for several years, with a number of them specifically intended to give existing owners greater control over their properties and costs.
These include making it easier and cheaper for leaseholders to buy their freehold or extend their lease, as well as increasing transparency over service charges and building management.
The government has also proposed capping existing ground rents at £250 a year before eventually reducing them to a peppercorn after 40 years.
Longer term, it plans to make commonhold the default form of ownership for most new flats, giving owners a stake in the ownership and management of their building rather than holding their property through a lease.
What more does Propertymark want?
Propertymark argues that the reforms need to go further and happen more quickly, especially for existing leaseholders.
It is calling for the proposed 40-year transition from the £250 ground rent cap to a peppercorn to be shortened and wants better redress for leaseholders challenging unreasonable service charges and costs.
It also wants standardised lease formats and an online database of lease information to make costs and obligations clearer and help speed up transactions.
On building safety, Propertymark wants the remediation process simplified and responsibility for costs made clearer.
It is also asking the government to consider financial support for leaseholders who wish to buy their freehold.
Propertymark Head of Policy and Campaigns Timothy Douglas says: “The move towards commonhold is welcome, but existing leaseholders cannot be expected to wait decades for change.”
He adds: “The UK Government must now go further and faster to unlock the market for existing leaseholders and restore confidence for consumers and property professionals.”
What happens next?
The government published its draft Commonhold and Leasehold Reform Bill earlier this year, but there is no firm timetable for when many of the proposed reforms will take effect.
The final Bill has yet to be introduced to Parliament and will then need to pass through the legislative process before receiving Royal Assent. The timing of many of the reforms will depend on how quickly that happens, with some measures also requiring further secondary legislation before they can be implemented.
