Is more leasehold coming our way?
Leasehold property is taking over from freehold in UK towns and cities, according to a survey carried out by conveyancer My Home Move. In recent years, there has been a rapid increase in new build flats in urban areas; they have a relatively small footprint and are an easy way to meet homebuilding targets as part of mixed-use developments and new neighbourhoods built on brownfield sites. This means that around 50% of all homes in London and Manchester are now leasehold. This is a growing trend in other towns and cities too, particularly in Liverpool, Newcastle and Birmingham, with leaseholds making up “almost all” of the new housing stock in some redeveloped districts, according to the survey.
My Home Move reports that in the central London WC, EC and W postcodes more than 60% of all property is leasehold, with Berwickshire and rural Wales having the lowest proportion in the country.
If this is a growing trend – and with new blocks on every urban skyline, there is no reason to assume that it’s not - the implications could be far-reaching. With more people living in apartment blocks, there is a greater need for property managers, creating more jobs at a time when employment opportunities will be badly needed. This is certainly a positive for our industry and in future, properly qualified and regulated managing agents will be needed more than ever.
However, an increase in flat living also means more people living in relatively small homes with little or no access to private outdoor space. So in tandem with an increase in leasehold property, we would like to see more investment in wellbeing programmes and public realm, in particular to ensure people without gardens have access to green space.
We can also forsee a number of other challenges. First, with zero ground rent and diminishing returns for investor freeholders coming soon, we are likely to see an increase in absentee building owners. In response, we would urge government to follow the Scottish example and legislate for reserve funds to avoid buildings falling into disrepair, and protect residents from unpalatable hikes in service charges for major works.
Second, with leasehold reform in the pipeline and the Government in favour of moving towards commonhold tenure, there will be increased responsibility for flat owners to maintain the building stock. This too could be a plus-point for property managers as residents will need to employ those with expert knowledge of property law, building pathology and health and safety. However, it does open up the possibility that blocks may not want to pay professional fees for these services, preferring to manage their own buildings. This could lead to disastrous consequences if any new legislation framing commonhold tenure doesn’t clearly promote the need for professional expertise – or mandate it.
And finally, we may end up with a greater price premium on freehold homes due to scarcity, pushing houses even further out of reach for homebuyers. There will always be a strong market for freehold property but planners must ensure that in their rush to create much-needed homes, they don’t allow the quick-fix of apartment building to result in a skewed market.
Author : Maryanne Bowring
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