Four out of five flat owners are struggling to sell their properties ‘within six months or so’, it has been revealed.
Speaking on Radio 4’s Today Programme, Richard Donnell, executive director at Zoopla, highlighted the data, saying: “It is not easy out there if you are trying to sell a flat.”
He continued: “Typically, across the market, around half of properties don’t necessarily find a buyer. But flats are clearly suffering from weaker demand and greater uncertainty – and that is what has been dragging on the value of a flat.”
The sale of flats has been affected by a number of complex issues in recent years, including service charge levels, ground rents and Government reforms. There has also been the cladding crisis and building safety concerns. It means lenders are looking more closely at how they underwrite loans on flats.
Donnell added: “Leasehold adds to the complexity. If you are buying a freehold house, you are in control of the costs and what you spend your money on.”
Buyers are increasingly becoming concerned about purchasing a leasehold flat, according to Donnell.
He said: “There is more concern about not just could I afford to live in the flat, what it will be like to live in but with leasehold, what can I do with the property, and what are the extra costs over the lifetime of my ownership. People need to factor that into what they pay for the property.”
It comes as the difference in price between a flat and a house in Britain is at its widest in three decades, Zoopla revealed. Donnell explained that the widening price gap is less of an issue in Scotland where share of freehold is more omnipresent, “In Scotland, there are less of the challenges than in England,” he said.
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With a massive solution to the housing crisis (and vote winner!) staring successive governments in the face, why won’t they act? Numerous consultations kick the can down the road and then legislation which was pretty pointless and now being dragged through Parliament again. Even the CMA concluded ground rent was neither legally nor commercially necessary, finding no persuasive evidence that consumers receive anything in return for it, and no evidence it improves estate management standards. Yet, the government solution? Capping it at £250… for the next 40 years. That’s another £10,000 drom every leaseholder for freeholders… £50 BILLION!!!
There are at least 5 million leasehold properties, mostly flats, which are typically the first rung on the housing ladder. That market has collapsed with wholesale negative equity, pushing leaseholders into financial ruin, repossession, and ill health; even death.
Reform or end leasehold properly and open up the market for flats… NOW!