Leasehold Becoming a ‘Toxic Tenure’?

Is leasehold becoming a “toxic tenure”? Recent coverage of flats struggling to sell raises an uncomfortable question for homeowners and the lawyers advising the next generation of buyers.

A property can provide a perfectly satisfactory home while becoming increasingly difficult to sell. Rising service charges, ground rent provisions, building safety concerns and uncertainty about future expenditure can all affect the pool of willing buyers.

For an owner trying to move, the question is immediate: why is nobody buying? For a conveyancer advising on a purchase today, another question follows: does the buyer understand the features of this particular lease that could complicate their eventual exit?

Why the question is being asked now

In its article “Why don’t flats sell any more?”, dated 14 October 2026, The Times examines the pressures affecting flat sales, including ownership costs, building safety and changes in demand.

Industry research points to specific obstacles. Propertymark reported in July 2026 that agents identified onerous service charges, escalating ground rents and short leases as significant barriers to selling flats.

“Toxic tenure” is a provocative description, rather than a legal category. Leasehold properties differ considerably. A well-managed building with understandable costs and acceptable lease terms presents a different proposition from one facing major expenditure, disputed accounts or a problematic rent review.

The useful question is whether the features of a particular leasehold purchase have been investigated and explained sufficiently for the buyer to make an informed decision.

For some owners, the difficulty only becomes clear when they sell

Two public accounts illustrate the concern. These are unverified reports by individual homeowners, rather than findings about the properties or the advice originally provided.

A service charge that more than doubled

In a May 2026 HousingUK discussion, an owner described struggling to sell a South London flat despite reducing the asking price. They said the annual service charge had increased from approximately £1,500 in 2020 to £3,333, and that agents identified it as an obstacle to attracting buyers.

Buyers withdrawing after considering the costs

In a separate January 2026 discussion, an owner reported two buyers withdrawing because of the service charge, with one withdrawal attributed to a mortgage refusal.

Neither account establishes a general lending rule. Lender requirements differ, and the reasons for a particular mortgage decision need to be confirmed.

Both illustrate how an ongoing ownership cost can become an obstacle to moving home.

Should conveyancers be considering the buyer’s eventual exit?

Yes, where the legal features being investigated raise relevant risks. That requires care about the distinction between explaining a lease and forecasting the property market.

The SRA’s guidance on advising on leasehold provisions addresses the need for buyers to understand material clauses and their implications. It explains that merely stating the current ground rent, calling a provision standard or directing a client to read the lease does not discharge the obligation to provide competent advice.

The guidance also recognises that advising on future marketability may fall outside an ordinary legal retainer. The scope of the instructions matters.

Our view is that firms should examine whether their reporting makes the practical consequences of material lease terms clear. A buyer needs information they can use when deciding whether to proceed, negotiate or obtain specialist advice.

What should a buyer understand before committing?

The appropriate investigation and advice will depend on the transaction. Useful questions include:

• Ground rent: how does it change, and what are the implications of the review mechanism?
• Service charges: what do the accounts, budget and replies reveal about current costs, increases and outstanding expenditure?
• Major works: what works are proposed, what funding exists and what remains uncertain?
• Lease length: what term remains, and what advice is needed about an extension?
• Management: are there disputes, missing information or difficulties obtaining necessary documents and consents?
• Building safety: what investigations, works or documentation remain outstanding?
• Lender requirements: are the instructions for this transaction satisfied, and are any approvals still required?

Acceptance by the present lender answers a question about the present transaction. It does not guarantee acceptance by every future lender.

Likewise, a service-charge figure for the current year does not establish what ownership will cost throughout the buyer’s intended period of occupation.

Our earlier article on leasehold problems buyers discover too late explores the underlying issues in more detail.

If your flat will not sell, identify the actual obstacle

“Buyers do not like leasehold” may describe the feedback, but it is too broad to identify what can be done.

Ask your estate agent and conveyancer to distinguish between limited interest, disagreement over price and an identified legal or lending problem.

Where a buyer withdraws, try to establish the specific reason. Was it the annual cost, an anticipated works bill, the lease wording, missing safety documentation or a lender requirement?

When I Bought provides separate guidance on:

• Service charges and major works affecting a sale or remortgage.
• Ground rent problems affecting buyers and lenders.
• Short leases and lease-extension issues.
• Cladding, EWS1 and building safety concerns.
• Defective lease provisions.

What were you told when you bought?

If the difficulty concerns something you did not understand at purchase, it may be worth examining the original advice.

A later increase in costs or a weaker market does not, by itself, show that the conveyancer made a mistake. The relevant questions concern the circumstances at the time: what existed, what information was available, what the lawyer was instructed to do and what advice was given.

The purchase file may help establish whether a rent review mechanism was explained, known major works were investigated or a material qualification was drawn to your attention.

There is also a distinction between information supplied and advice explaining its significance. Receiving a lease or management pack does not necessarily answer what the buyer was told about the implications.

Where historical lender instructions are relevant, the requirements applying when you purchased may matter. Today’s wording cannot automatically establish what was required years earlier.

A warning about leasehold should help the buyer decide

A blanket description of leasehold as “toxic” offers little practical assistance. Equally, a routine explanation of tenure may leave a buyer unaware of the significance of a particular provision.

The better question is specific: what does this lease, in this building, mean for this buyer’s ownership and possible future sale?

For an existing owner now facing an unexpected obstacle, that leads to another question: would understanding the issue before purchase have changed the decision?