House buyers are shunning leasehold houses following recent controversy which culminated in a government ban.
In England and Wales, 4.2% of all new houses were sold as leasehold in 2018, down from 13.3% in 2017. Terraced houses were the most likely type of new house to be sold as leasehold in 2018.
In the North West of England, 21.8% of all new houses were sold as leasehold in 2018, more than any other area but down from 58.5% in 2017. Out of all leasehold sales of new houses in 2018, two-thirds were in the North West, continuing historical trends.
Within the North West, the Greater Manchester area had the highest percentage of new house sales that were leasehold in 2018.
A consultation paper Tackling unfair practices in the leasehold market was published by the Ministry of Housing, Communities and Local Government (MHCLG) in July 2017. The resulting Summary of consultation responses and government response was published in December 2017. It stated that leaseholder respondents suggested “developers were maximising their returns by developing a business model which allowed connected companies, owned by developers, to generate further income streams.”
Following this consultation, the government announced possible changes to the leaseholds system, including “a ban on leaseholds for almost all new build houses”. In addition, the Welsh Government released a statement on leasehold reform in Wales in March 2018.
More recently, the Competition and Markets Authority (CMA) opened an investigation into the leasehold housing market. This was followed by the House of Commons library releasing a paper on Leasehold and commonhold reform that considers issues associated with leasehold ownership.
The proportions of both new and existing houses sold as leasehold were similar until around 2004, after which there was an increase in the percentage of transactions of new houses that were leasehold. Larger increases followed in 2015 and 2016, when the percentage of new houses sold as leasehold peaked at 15.1% of all new houses. The percentage of existing houses sold as leasehold has remained stable throughout.
The fall in new houses being sold as leasehold was across all house types in 2018, with each dropping by more than half compared with the previous year. New terraced houses were the most likely to be sold as leasehold, with 6.7% of all new terraced houses being sold as leasehold in 2018.
The largest percentage drop was for sales of new leasehold detached houses, which fell from 12.2% of all new detached houses sold as leasehold in 2017, to 3.1% in 2018.
The fall in the percentage of new houses that sold as leasehold in 2018 was reflected within all English regions and Wales.
The North West remained the region with the highest percentage, with 21.8% of all new house sales being leasehold in 2018, although this fell from 58.5% in 2017. The consultation paper Tackling unfair practices in the leasehold market published by the Ministry of Housing, Communities and Local Government (MHCLG) refers to the prevalence of houses sold as leasehold in the North West. It states that “the sale of new build leasehold houses in some areas of England is an accepted custom and practice… it is particularly common practice in parts of Cheshire, Greater Manchester, Lancashire and Merseyside.”
London had the second-highest percentage, with 15.9% of new house sales that were leasehold. This was a relatively small drop from 2017. Within the North West, there are concentrations of sales of new leasehold houses.
In 2018, the highest percentage of property transactions of new leasehold houses in the North West were in and around the Greater Manchester area. This is consistent with predominantly urban areas generally having higher concentrations of new houses sold as leasehold. Although there was a drop in the sales of new houses that were leasehold across the North West in 2018, this was still a similar pattern to 2017.
The decrease in the percentage of sales of new houses that were leasehold was across all house types in the North West. The largest decrease was for detached houses, where the percentage of new detached houses sold as leasehold fell from a peak of 70% in 2016 to 18.6% in 2018.
This section looks at how sales of new houses as leasehold are distributed regionally across England and Wales. This shows each region’s or country’s new houses sold as leasehold as a share of all new houses sold as leasehold across England and Wales.
In 2018, there were 3,242 new houses sold as leasehold in England and Wales. Out of these, two-thirds were in the North West.
Out of the 3,242 new house sales that were leasehold in England and Wales in 2018, more than 2,000 were in the North West. All other English regions, and Wales, had relatively low percentage shares, ranging from 1% in the North East to 9% in Yorkshire and The Humber.
The North West has consistently had the largest share of new leasehold house sales in England and Wales.
The North West has consistently had most sales of new houses that were leasehold, accounting for a larger percentage than for the rest of England and Wales put together.
