David Grantham, 42, bought his two-bedroom flat in Hertfordshire in 2018 for £262,000.
Conventional wisdom would dictate that the home would have increased in price, but more than seven years later, David had the home valued at £253,000 – £9,000 less than the figure he bought it for.
There’s a clear reason why David’s flat – the first property he has owned – has dropped in price.
It is a leasehold flat, and the lease has just 71 years to run – with an extension costing tens of thousands of pounds.
A leasehold is when a buyer purchases the right to live in the property for a fixed term via a lease agreement with a freeholder, rather than owning the building or land outright.
Many homes, particularly flats, are sold under these agreements but they can come with expensive service charges and ground rent. Extending leases can be costly too.
When David bought the flat with his partner, he says he wasn’t aware of the problems that buying a leasehold could pose, and that it did not appear that anybody involved in the transaction – including his solicitor or mortgage broker – warned him against buying the property.
It was only when he tried to extend the lease, in preparation for potentially upsizing in the coming years now that he has two children, that the challenges became clear.
He spoke to a company specialising in lease extensions that suggested the cost of extending could be around £30,000, but without it, the property would be worth just £253,000. An extension would push the price up to around £300,000.
Neighbours who had extended had faced even higher costs – with one charged £40,000.
“Essentially, we’ve lived here for eight years and won’t make a penny on the sale, and bear in mind we’ve done lots of renovations, including to the bathroom, doors, and more,” he said.
“We would not have bought the place if we’d known what we know now,” he added.
David says he has friends who purchased houses at the same time as him and his partner who have seen their homes go up in value by tens of thousands of pounds, but the lack of price growth in his own home is stopping him upsizing.
Figures from Nationwide suggest that an average UK home bought for £253,000 in 2018 should have risen to a price of around £322,575 today.
But – partly down to rising awareness of leasehold issues – the value of flats has risen at a far slower rate than houses.
In fact, recent research from estate agency Hamptons shows that flat sellers are four times more likely to sell at a loss than house owners.
David says the dip in the price of his home will have a severe impact on his family.
“It keeps me up at night and is constantly on my mind. This will affect us for the rest of our lives because we can’t move to the next property. We’re stuck for now.”
The sales co-ordinator is hoping that the Labour Government delivers leasehold reforms so he can afford to do so, and then move on to a bigger, three-bedroom home.
“I feel a bit duped by the market as a first-time buyer. The amount of information you have to provide is huge for getting a mortgage, but nobody when we were buying gave us any full detail up front about leasehold and we were not aware of what we were getting into,” he says.
The Government has committed to a series of leasehold reforms but their long-awaited Leasehold and Commonhold Bill, which is intended to overhaul the entire system, has been delayed.
The legislation had been expected before Christmas, but now the Government says it will be released as soon as possible.
Some campaigners are also worried that some details of the legislation could be watered down, and won’t go far enough.
David says for him, one priority would be to abolish the marriage value fee, a major cost for leaseholders with fewer than 80 years remaining on their leases, who want to extend.
This is set to be abolished under the Leasehold and Freehold Reform Act 2024, introduced by former Conservative housing secretary Michael Gove before the last election, but has not yet been implemented and the current Government says it needs secondary legislation to bring it into force.
David says he is relying on reform to allow him and his family to move home, as it will currently cost him tens of thousands of pounds to extend his lease and push the price of his property up above what he initially bought it for.
“The market for this sort of property is entirely stagnated. First-time buyers are almost being told not to touch leasehold until reforms have gone through,” he says.
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“For now, we’re treading water, and relying on reform to come good. But at the time the longer we wait, the more it will cost us to renew the lease so it’s a very hard balance,” he says.
A Government spokesperson said: “Homeowners like David should not have to face huge and unclear charges to extend their lease.
“That’s why we’re tackling this by making extension costs cheaper and more transparent alongside banning leaseholds for new flats, as we bring this broken system to an end.”
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