The report contains information on how leasehold operates in Wales, providing insights into the impact it has. It was commissioned to fill gaps in Ministers’ understandings of how the sector works and is one of several initiatives taken following criticism of poor practice.
Key findings of research into leaseholds in Wales
- There are approximately 235,000 leasehold properties in Wales, representing 16 per cent of the housing stock.
- In general, purchasers buy a leasehold property based on location, type, and issues such as security, rather than making an active choice to buy a property of this type.
- Leaseholders do not fully understand the implications of the law when they buy a leasehold property, due to the legislation's complexity.
- Even those who understand the law aren't necessarily prepared for the lived-in experience of leasehold.
- Leaseholders participating in this research echoed the disadvantages highlighted by the Law Commission: the lease is a wasting asset and leaseholders do not experience the freedom and control they expect from property ownership.
- The position and experience of leaseholders in Wales are not substantially different from that revealed by investigations into leasehold in England.
No good reason for monetary ground rent
Along with recommendations from the Law Commission and the Task and Finish Group, consideration has been given to a range of evidence including Senedd debates and questions and other relevant activity including the Competition and Markets Authority’s ongoing investigation into leasehold sales practices.
Ownership tenure of last resort
Without action, leasehold will become the ownership tenure of last resort, therefore, the Minister’s intentions to reform the sector include:
- Restricting future ground rents to zero for leasehold properties in the third phase of Help to Buy-Wales
- Paving the way for a permanent restriction of future ground rents to zero at the earliest legislative opportunity
- Seeking the UK Government’s agreement that our officials work together to explore a joint approach to legislation enacting Law Commission’s recommendations
The Law Commission's report contains measures to bring about a fairer system by limiting restrains on freeholders to buy or extend their lease. They also include recommendations to improve the Commonhold system as an alternative to leasehold.
The Minister is fully supportive of the Law Commission's recommendations, however, states they will require significant primary legislation. This will need full support from the future Welsh Parliament following the elections to be held in May 2021.
Propertymark lobbying
Propertymark is a member of the Welsh Government’s Task and Finish Group set up to reform the leasehold sector. In July 2019, the Group released its report identifying failings in the leasehold system. Ahead of the Welsh elections, Propertymark called for reform of the leasehold sector in Wales through the implementation of the primary recommendations of the Residential Leasehold Reform Task and Finish Group.
In September 2018 we published our own research after surveying over 1,000 leaseholders. The report, Leasehold: A Life Sentence? has received coverage from many major news providers and has been quoted in Parliament during debates.
Leasehold: A Life Sentence?
Thousands of homeowners are stuck in leasehold houses they cannot afford to continue living in and cannot sell. We surveyed over 1,000 people who bought a leasehold house to explore the extent of the scandal which has left thousands of Brits trapped in leases with third parties.