The end of 2017 saw the government crack down on leaseholds and ground rents across England and Wales, but Land Registry data shows that almost 32% of all transactions last year were made up of leasehold properties.
In December, Communities Secretary Sajid Javid announced the government’s plans to tackle unfair practices within the leasehold system, which meant banning all leasehold new-build houses being sold in the UK to increase fairness for homeowners, with the exception of those on shared ownership schemes. Ground rents on new long leases are also prohibited under the new rules, after it emerged that some properties were being sold with clauses that meant ground rents were doubled every 10 or 25 years.
However, existing leaseholds are currently unaffected by the government’s changes, and the majority of flats are owned by a separate freeholder and therefore sold on a leasehold basis. According to analysis conducted by sellhousefast.uk, which looked at Land Registry data, 31.9% of all properties sold last year were leaseholds, a significant increase compared to 26.9% in 2016.
Lowering asking prices
Existing properties sold with leaseholds accounted for 84.1% of the 219,511 total, compared to 15.9% of new-builds. When looking at flats alone, only 2.13% of those sold were freeholds.
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The highest proportion of leasehold sales was found in London, where this property type made up 67.13% of the total homes sold, followed by Manchester with 52.58%. In Sheffield, the share of leasehold homes sold was 46.75%, and Liverpool was in fourth place with 37.23%.
Stoke-on-Trent had by far the highest number of freeholds, with just 4.97% of properties sold there being leaseholds, followed by Doncaster with 5.25%.
Robert Du Toit, managing director at Sellhousefast.uk, said: “We are yet to see how the Government will solve the issue of the existing leaseholders and how the latest measures will affect the property market.
“I’m afraid that existing leaseholders will probably have to lower the asking price considerably if they want to sell. I can’t imagine who will want to buy a property with preposterous ground rents, especially now that the Government promised to set the ground rents on new long leases – for both flats and houses – to zero.”
