New research has revealed potential buyers of leasehold properties are now more alert to the issues that may arise, with agents subsequently finding such properties harder to sell.
This comes according to agency membership body Propertymark, who surveyed their members in a new report named Leasehold 2023: Has anything changed?
It found consumer knowledge of issues around leasehold has risen with the implementation of the Building Safety Act 2022 when compared with a similar survey they conducted five years ago.
Specifically, 72% of agents believe homebuyers are more aware of issues surrounding leasehold property, with 60% of buyers asking for information about the lease before they view a property.
What’s more, one of the most high-profile issues associated with leasehold property was a recent practice imposed by some developers to include an escalating ground rent in their leasehold agreements.
While reforms to leasehold have been introduced since 2018, Propertymark say they have not gone far enough to completely resolve the issue. The Leasehold Reform (Ground Rent) Act 2022 restricts ground rents to zero but only on newly created long residential leases for single properties.
As a result, 78% of agents said that leasehold property with an escalating ground rent will struggle to sell, even if priced correctly.
On a separate note, 54% of agents who sell property on behalf of developers report that they do not always provide the pertinent leasehold information.
With regards to cladding, agents report that 51% of buyers ask about cladding before they view a property with 11% of agents saying that buyers only ask after they have agreed to purchase a property. 16% reported that buyers only ask when banks make enquiries as part of the buying process.
In February, Michael Gove, the Secretary of State for Levelling Up, Housing and Communities said the UK Government would abolish the “outdated feudal” leasehold system. 42% of agents said leasehold should be abolished with 16% undecided. Propertymark said:
“Estate agents have a level of responsibility, and the Consumer Protection Regulations require agents to pass on all material information in respect of a lease. To further support leaseholders, agents want to see an extension of the requirements to restrict ground rents, lease lengths to be extended to 999 years, an improvement on how information can be obtained from management companies, and the need for more clarity on processes and rights for acquiring the freehold.”
Commenting on the release of the report, Timothy Douglas, Head of Policy and Campaigns, Propertymark, said:
“Property agents play a key role in supporting home buyers and sellers, so it is positive to see that consumer awareness about leasehold information has increased. However, increasing awareness is only one piece of the puzzle.
Policymakers must do more to create a level playing field with those who already own a leasehold property, make enfranchisement easier, simplify the process for lease extensions and where there is no managing agent, freeholders must sign up to a redress scheme.
Furthermore, as with sales, lettings and managing agents, for developers, there are no minimum standards to work in the sector and there are no statutory rules to ensure those buying and selling leasehold property are suitably qualified. As highlighted by the findings in our report a whole sector approach is needed to further protect consumers and bring about positive change for leaseholders.”
