Leasehold crisis continues as thousands face mounting costs

Leaseholders remain trapped by rising costs and are unable to sell their homes, despite the government’s Leasehold and Freehold Act.

Propertymark’s leasehold still a life sentence report reveals that progress on leasehold reform has been slow, with estate agents continuing to struggle to sell leasehold properties.

The news comes as the government has announced further leasehold reforms, including measures to give leaseholders clearer information about the service charges they pay and stronger protections against unfair costs.

Increase in costs

According to the report, 93% of leaseholders surveyed said they would not buy a leasehold property again, with many saying they would only consider doing so if there was no other option.

More than 86% of leaseholders reported increases in service charges over the past 24 months, with 62% seeing rises of more than 21% and more than one in four reporting increases of over 60%.

Rising costs are also affecting sales, with 58% of leaseholders saying service charges and 53% saying ground rent had a major impact on their ability to sell their property.

Estate agents are facing similar challenges, with less than 1% saying selling leasehold properties has become easier, while more than 76% said it has become more difficult.

More than 78% had at least one leasehold property withdrawn from the market due to being unsellable, citing high service charges, escalating ground rents and short leases as key issues.

Letting agent concerns

Letting agents also raised ongoing concerns around building safety issues, including EWS1 requirements.

An EWS1 form is an external wall safety assessment used to confirm whether the external walls of a block of flats meet fire safety standards.

Without an EWS1 form, or where issues are identified, some mortgage lenders may refuse to lend, making affected properties harder to sell.

Letting agents warned that these ongoing challenges, alongside uncertainty around leasehold reform, are damaging confidence in leasehold properties and making them increasingly difficult to sell.

A letting agent from the East of England told the report: “Legislation is currently in limbo; we need to end the constant U-turns and get some real clarity of changes so that we can address the overall credibility of leasehold and a saleable proposition to potential buyers.

Industry reaction to report

Katie Kendrick OBE, founder of the National Leasehold Campaign, said: “Eight years on, this report makes one thing undeniable: leasehold remains a life sentence. The NLC strongly support its findings.

“Despite nearly a decade of commitments, progress has been too slow, too limited, and too easily diluted. As a result, too many leaseholders remain trapped, unable to sell, unable to move, and facing costs they cannot afford.

“This is not just a failure for leaseholders, it is a failure of the housing market. The evidence is clear. Estate agents identify three consistent barriers to selling flats: onerous service charges (74%), escalating ground rents (65%), and short leases (63%). The lack of implementation of leasehold reform is not only harming individuals, it is actively choking supply and confidence across the market.

“The government’s ambition to transition to commonhold is welcome, but it cannot be used as a substitute for action now. That transition will take years, potentially decades, leaving hundreds of thousands of existing leaseholders trapped in limbo.

“That is neither realistic nor acceptable. This report reinforces a simple but urgent truth: without immediate, targeted reform for existing leaseholders, the crisis will persist, for individuals, for families, and for the wider housing system.”

Sebastian O’Kelly, director at the Leasehold Knowledge Partnership, added: “Despite nearly a decade of promises, consultations and legislation, too many leaseholders remain trapped in homes they cannot sell, facing escalating service charges, unaffordable lease extension costs and ground rents that continue to blight the market.

“This is no longer just a leaseholder crisis, it is a housing market crisis. The report’s findings are particularly significant because they reflect not only the experiences of leaseholders, but also those of property professionals. Estate agents identified onerous service charges, escalating ground rents and short leases as the three biggest barriers to selling flats, demonstrating that leasehold is actively restricting mobility, reducing confidence and undermining the functioning of the housing market.”

Reforms need to deliver meaningful change

Propertymark is calling on the government to accelerate leasehold reform as Andy Burnham looks set to become the next Prime Minister. Recommendations include reviewing the proposed 40-year timeline for reducing ground rents to a peppercorn.

Henry Griffith, senior policy officer at Propertymark, told Property118: “The recommendations most likely to deliver noticeable benefits for leaseholders looking to sell are those that reduce the risk of property transactions falling through.

“Buyers, mortgage lenders, and solicitors are increasingly aware of leasehold-related risks, many of which only emerge late in the sales process and can cause transactions to collapse.

“In particular, bringing forward the reduction of ground rents to a peppercorn would remove one of the most common barriers to sales. Similarly, simplifying the building safety remediation process and setting a clear completion deadline would boost buyer confidence by reducing uncertainty around safety defects and potential remediation costs.”

He added: “Providing financial support for leaseholders to purchase their freehold could also help by making ongoing charges more transparent and reducing concerns around lease terms, giving greater confidence to buyers, lenders, agents, and solicitors.

“Finally, regulating property agents would raise professional standards and improve service quality, helping buyers and sellers navigate the complexities of leasehold transactions more effectively while reducing the likelihood of sales falling through.”

The government has announced further leasehold reforms, including a new service charge demand form to provide clearer information on payments and what they cover.

New rules will also protect leaseholders from unfair legal costs in disputes and allow them to recover their own costs.

Nathan Emerson, CEO of Propertymark, said: “The government plans to replace leasehold with commonhold, but the transition will take time. While leasehold reform is needed, relying solely on commonhold could leave thousands of existing leaseholders without meaningful change for decades.

“Our evidence highlights the need to support current leaseholders during the transition. However, it remains essential that reforms deliver meaningful and measurable change, creating a system that is fit for future generations.”