UK leasehold reforms urged by Propertymark amid service charge concerns

Propertymark is urging the UK Government to accelerate leasehold reforms to provide immediate protections for current leaseholders. A report titled ‘Leasehold: Still a Life Sentence?’ highlights that many issues identified nearly a decade ago remain unresolved, noting that 93% of surveyed leaseholders would not purchase a leasehold property again.

The report finds that 86% of leaseholders have experienced service charge increases in the last two years, and 89% find it difficult to challenge unfair charges. These costs are cited as a major barrier to sales, with 74% of estate agents identifying onerous service charges as a primary obstacle to selling leasehold flats. Some agents reported removing leasehold properties from the market entirely because they were deemed unsellable.

Simultaneously, the government is consulting on leasehold enfranchisement valuation rates under the Leasehold and Freehold Reform Act (LAFRA). This includes determining deferment and capitalisation rates, which significantly impact the redistribution of value between leaseholders and freeholders. The setting of these rates is critical, as small percentage changes can lead to substantial differences in the premiums payable by leaseholders.