Leasehold flats to be banned

Not for the first time do we get an announcement from the government that they are planning to overhaul the leasehold system, including a ban on new leasehold flats. The newly released document promises to allow apartment owners the chance to own a stake in their own buildings under a system known as commonhold.

The announcement this week follows up The Leasehold and Freehold Reform Act 2024 which was rushed through during the last few days of the last Tory government and before the General Election was called. The aim of the new law is to make the system fairer and put an end to what they see as unacceptable behaviour by freeholders in relation to service charges, fees and insurance costs. The legislation will only apply to new properties not to existing.

Despite their bieng widespread support for the introduction of commonhold it is over 20 years since the idea was first proposed and little progress has been made. There is also concerns as to the practicalities of the system including the complexities of the block management, lending criteria and owners’ responsibilities. The proposals could also create a two-tier market in that it is likely to take time to be introduced and “in the interim there is a risk that the value of leasehold homes is negatively impacted, which will not help owners or liquidity in the housing market” as Propertymark point out.

Liverpool like many cities in the UK has tens of thousands of apartments with around 3/5,000 new apartments built every year. The effect on the residential market in Liverpool is difficult to gauge at this moment but our initial view would be that it would make little/no difference to the market whether this is the demand to buy and sell or from tenants renting.