Leasehold and freehold property price gap reaches 77%
The gap between the average price of a leasehold property and the average price of a freehold home has reached 77%, according to HouseScan.
Across England, leasehold homes have sold for an average of £185,129 in England over the last year, whilst freehold homes have sold for £327,009.
In Wales the average freehold has sold for 44% more at £163,993, compared to £113,660 for the average leasehold.
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The price gap is largest in London, where freeholds have sold for 97% more over the last 12 months.
The South East and East of England have also seen freehold homes sell for 80% and 83% more than leaseholds respectively.
This gap is smallest in the North West, although the average freehold home has still commanded an average sold price 32% higher than that of leasehold homes in the last year.
On a regional basis, Kensington and Chelsea noted the greatest leasehold to freehold property price gap in the whole of England and Wales.
Over the last year, the average freehold home in the borough has sold for £3.3m.
In contrast, leasehold homes have averaged just £980,000 during the same time period, resulting in a freehold premium of 237%.
However with this new government legislation, the lower price paid for leasehold homes could now present an opportunity for homebuyers to get on the ladder at a far lower cost, according to HouseScan.
Harry Yates, founder and managing director of HouseScan, said: “I think we can all agree that the government’s shake-up of the leasehold structure is well overdue.
“For far too long, leasehold homeowners have been at the mercy of their freeholder and we’ve seen some pretty backhanded practices uncovered in recent years.
“It’s simply not acceptable to toy with someone’s life, particularly for little motivation other than greed and these latest reforms should help steady the ship and bring greater security to those in the leasehold space.
“It could also help reduce the current price deficit paid for leasehold homes as the stigma surrounding them starts to lift.
“All too often, the renewal of a lease or the time left on it can impact the price a buyer is willing to pay.
“So a 990-year extension and the promise of zero ground rent should help overcome this.
“Of course, it’s important to note that property type also plays a big part in this difference in price and so we’re unlikely to see the gap close completely.
“While leasehold properties aren’t exclusively restricted to flats, they are far more common when compared to other types of housing stock and so this also influences the lower price paid for leaseholds in general, but also in areas such as London where a greater proportion of housing stock is flats.”