The one law that makes a million homes unsellable

Housing campaigner, associate fellow of the IPPR think-tank and editor of Red Brick, a blog about affordable housing Britain’s housing market is in a slump. More and more people trying to sell are finding that nobody is willing to pay what they’re asking for their homes. Some find that their shared ownership flats look like bad value to buyers. Others don’t want to take a hit on what they paid when prices were climbing more quickly. And the slow progress on leasehold reform has left other sellers in limbo. So, who’s responsible for Britain’s unsellable homes? Housing reporter Pete Apps, policy expert Rose Grayston and housing guru Charlie Lamdin give their perspectives. Like millions of other private renters in Britain today, I would like to own my own home. I want the security of knowing my landlord cannot suddenly put up the rent, leaving me choosing between finding hundreds of pounds more each month or finding somewhere else to live. For previous generations, buying a flat was the classic first step onto the property ladder: a chance to put down roots while building up equity towards your next home. But for millions of leaseholders, homeownership hasn’t delivered the security they expected. The lease attached to their flat has become a trap. Buy the wrong flat and you could find yourself paying service charges running into thousands of pounds a year, followed by an unexpected five-figure bill for major works you had little say over. On top of your mortgage and service charges comes an annual ground rent, paid to the freeholder who owns your building. Depending on the small print in your lease, a once-modest ground rent can double every decade until it runs into thousands of pounds a year. Had enough? Try convincing someone else to buy your flat. An extraordinary 87 per cent of leasehold flats put on the market in the final quarter of 2025 were still unsold six months later. Estate agents report that high service charges, ground rents and uncertainty over future costs are putting buyers off. Ground rents cause an even more fundamental problem. Mortgage lenders scrutinise leases for onerous rents and escalation clauses because they damage a property’s future value. If a lender won’t accept your flat as security for a mortgage, the vast majority of potential buyers cannot buy it. All this also acts as a drag on housing supply, because Britain needs people to want to buy flats. If the Government wants denser housing around stations and in cities, a functioning apartment market matters. A generation watching friends become trapped by service charges and toxic leases isn’t much of an advertisement for flat ownership. Successive governments have been trying to dismantle this “fleecehold” system in England and Wales since 2017. The 2022 Leasehold Reform (Ground Rent) Act abolished ground rents on most new leases, but not existing ones. The 2024 Leasehold and Freehold Reform Act went further, with measures to make service charges more transparent and easier to challenge. Two years on, however, many of those protections have yet to take effect. But stopping new abuses is much easier than unpicking millions of existing contracts. That ground rent which is putting off mortgage lenders and potential buyers is your freeholder’s property, and they are contractually entitled to keep collecting it. Simply cancelling that income retrospectively invites legal challenges too. When Norway grappled with a similar system of ground leases, its first attempt to provide relief for homeowners was successfully challenged on human rights grounds. The Norwegian Parliament then worked to construct a careful compromise between the public interest and landowners’ property rights, allowing ground rents to rise, but subject to a statutory cap and strict limits on future increases. When landowners challenged that settlement too, the European Court of Human Rights found it struck a fair and legally robust balance and unanimously upheld it in 2022. The whole process took over a decade. Britain’s freeholders have powerful incentives to fight reforms that reduce the value of their assets – and have shown they are prepared to do so. Major freeholders and investors have already taken the Government to court over reforms in the 2024 Act, arguing that they unlawfully interfered with their property rights. The Government won that case. Now freeholder representatives are threatening further legal action over plans to cap existing ground rents. That makes getting the next stage of reform right all the more important. The Government’s Commonhold and Leasehold Reform Bill, which will be brought before Parliament this session, appears to learn the lessons from Norway. It would cap ground rents in existing leases at £250 a year, before reducing them to a peppercorn rate – effectively zero – after 40 years. This should reassure mortgage lenders and allow leaseholders to move, without immediately extinguishing freeholders’ ground-rent income. The Bill would also make commonhold the default tenure for new flats, beginning the process of ending leasehold altogether. Legal complexity is a reason to get reform right, not a reason to put it off. The challenge is to combine urgency with legal certainty. Reform that becomes bogged down in years of litigation would prolong the very uncertainty that is putting buyers and mortgage lenders off. Buying a home is supposed to offer an escape from unpredictable housing costs, not exchange one form of insecurity for another. An exploitative system has meant the opposite for many leaseholders. In England and Wales, buying a home can result in financial precarity because of an unpredictable freeholder. If the Government’s reforms succeed, owning a flat could once again become what it used to be: a secure first step onto the property ladder from which people can move on when they need to. For nearly a million leaseholders trapped by high ground rents, change can’t come fast enough. The task now is to make sure that when it comes, it lasts.