The Leasehold Flats That No One Will Buy
Thousands of leasehold flats across England and Wales are now effectively unsellable. Propertymark's latest research, based on a survey of its members, found that 70% of estate agents have seen sales fall through because of leasehold issues, with cladding and building safety concerns cited as the leading cause. This affects prime city-centre stock, new-build developments, and ex-local authority blocks alike.
The root causes are well documented: the Building Safety Act 2022, the ongoing cladding scandal, and lenders' cautious approach to anything without a valid EWS1 form. The practical consequences for anyone trying to sell, remortgage, or value a leasehold flat are severe. This article explains what Propertymark found, why conveyancing is stalling, and what you can do if you own or manage affected stock.
What Propertymark's Research Actually Found
Propertymark surveyed its member agents in 2023 and 2024. The headline figures:
- 70% of agents reported sales falling through due to leasehold issues.
- 62% said cladding and building safety were the primary reason.
- 55% cited short leases (under 80 years) as a deal-breaker.
- 48% pointed to high ground rents or escalating ground rent clauses.
- 40% said lenders were refusing to lend on buildings without an EWS1 form.
These numbers align with wider industry data. The Leasehold Advisory Service (LEASE) reports a sharp rise in enquiries about lease extensions and right-to-manage claims. The Conveyancing Association has warned that leasehold transactions now take an average of 12 to 16 weeks, compared to 8 to 10 weeks for freehold. In some cases, delays stretch to six months or more.
Why Lenders Are Refusing to Lend
The mortgage market has tightened dramatically since the Grenfell Tower fire in 2017. Lenders now require an EWS1 form for any building with cladding or external wall systems. The EWS1 process is expensive, slow, and inconsistent. A building can pass with one assessor and fail with another. For landlords, a flat that was mortgageable in 2016 may now be unmortgageable in 2025.
Propertymark's research highlights that 40% of agents have seen lenders withdraw offers after a down-valuation or a failed EWS1. Without a mortgage, the pool of buyers shrinks to cash purchasers, who typically offer 20-30% below market value. That is what makes a flat unsellable in practical terms: it is not that no one wants it, it is that no one can finance it.
The Cladding Crisis and Building Safety Act
The Building Safety Act 2022 introduced new responsibilities for building owners and managers. It also created a leaseholder protection scheme, but the rollout has been slow. The Building Safety Fund and the Cladding Safety Scheme have helped some buildings, but many leaseholders remain trapped. Propertymark's research found that 30% of agents have clients who have been waiting over a year for remediation work to start.
For landlords, the financial exposure is significant. Service charges have risen sharply to cover interim safety measures, such as waking watches and fire patrols. In some blocks, these costs have doubled or tripled. Those costs are passed to leaseholders, reducing net yields and making the flat even harder to sell.
Short Leases and Ground Rent Traps
Leases under 80 years are difficult to mortgage. Lenders typically require a minimum of 70 years remaining, and many prefer 85 or more. Propertymark found that 55% of agents have seen sales collapse because of short leases. The problem is compounded by the cost of extending a lease. Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders have the right to extend, but the premium can run into tens of thousands of pounds, especially in London.
Ground rent is another deal-breaker. Escalating ground rents, particularly those that double every 10 or 15 years, have been criticised by the Competition and Markets Authority. Some lenders now refuse to lend on any lease with ground rent over £250 per year outside London, or £1,000 in London. The Leasehold Reform (Ground Rent) Act 2022 banned new escalating ground rents, but existing leases remain affected.
Conveyancing Delays and the Information Gap
Leasehold conveyancing is slow because of the volume of information required. Management packs, service charge accounts, building safety information, and EWS1 forms all need to be obtained from freeholders or managing agents. Propertymark's research found that 45% of agents reported delays of over four weeks just to receive a management pack. In some cases, freeholders charge exorbitant fees for these packs, adding further cost and delay.
Technology can help. Using a property inventory software platform allows agents and landlords to maintain accurate, up-to-date records of building safety documentation, service charge histories, and lease terms. When a sale or remortgage is attempted, the information is ready to share, reducing the risk of last-minute collapses.
What Landlords and Agents Can Do
If you own or manage a leasehold flat that is affected, there are practical steps you can take.
1. Check the Lease Length and Ground Rent
If the lease has under 85 years remaining, start the extension process now. Delaying only increases the premium. If ground rent is escalating, seek legal advice on whether it can be challenged or renegotiated.
2. Obtain an EWS1 Form
If the building has cladding, an EWS1 form is essential. Work with the building owner or residents' management company to commission an assessment. If the building is eligible for the Cladding Safety Scheme, apply as soon as possible.
3. Review Service Charges and Building Safety Costs
Understand what you are paying for and whether costs are reasonable. Challenge excessive charges through the First-tier Tribunal (Property Chamber) if necessary.
4. Keep Documentation Ready
Maintain a digital file of all lease documents, service charge statements, EWS1 forms, and correspondence with the freeholder. This speeds up conveyancing and reduces the risk of a sale falling through.
5. Consider Alternative Exit Strategies
If the flat is genuinely unsellable, consider other options: lease extension, collective enfranchisement, or selling to a cash buyer at a discount. Some landlords have successfully converted leasehold flats to freehold through collective enfranchisement, removing the leasehold issues entirely.
The Role of Government and Industry Bodies
The government has introduced several measures to address the leasehold crisis, including the Leasehold and Freehold Reform Act 2024. This Act makes it easier and cheaper for leaseholders to extend their leases and buy their freeholds. It also bans new leasehold houses and caps ground rents for new leases. However, the Act does not retrospectively fix existing problems, and many leaseholders remain trapped.
Industry bodies such as ARLA Propertymark and the NRLA continue to lobby for further reform. Propertymark has called for a standardised EWS1 process, a cap on management pack fees, and a statutory time limit for freeholders to provide information. Until these changes are implemented, the market will continue to see unsellable leasehold flats.
What This Means for the Rental Market
Unsellable flats often end up in the rental market. Landlords who cannot sell may choose to let instead. This increases rental supply in some areas, but it also means tenants may be living in buildings with unresolved safety issues. The Building Safety Act requires landlords to provide tenants with safety information, and failure to do so can result in fines or prosecution.
For letting agents, this creates a compliance burden. You need to verify that the building has a valid EWS1 form, that service charges are paid, and that the lease allows subletting. Using a property inventory app can help you track these documents and ensure you meet your legal obligations.
The Future of Leasehold Flats
The leasehold system is under pressure. The government has committed to abolishing leasehold for new-build houses and making it easier for leaseholders to take control. But for existing flats, the problems will persist for years. Propertymark's research suggests that without urgent reform, more leasehold flats will become unsellable, trapping owners and reducing housing supply.
For landlords and agents, the message is clear: act now. Check your leases, obtain the necessary documentation, and consider your exit strategies. The market is unforgiving, and delays only make things worse.
How Our Property Inventory CRM Can Help
Managing leasehold properties requires accurate, accessible records. Our property inventory CRM is designed for landlords, agents, and property managers who need to stay on top of building safety documentation, service charge histories, and lease terms. With our AI-powered inventory software, you can store EWS1 forms, track lease lengths, and generate compliance reports in minutes. Book a demo today to see how our platform can help you avoid unsellable leasehold flats and keep your transactions moving.