Landlords avoid leasehold flats over EPC C targets and service charges

A letting agency warns landlords avoid letting out leasehold flats due to EPC C targets and service charge challenges.

A survey by Leaders Roman Group (LRG) reveals that 58% of flats let by landlords are leasehold, but over a third of landlords (34%) now say they actively avoid letting leasehold flats because of leasehold-related issues or the complexity of building management structures.

The cost of upgrading to EPC C targets for leasehold properties is also prompting landlords to avoid them.

Previously, Property118 reported that The Property Institute warned EPC C targets could lead to a shortage of leasehold rental properties.

Leasehold reform is essential

According to the LRG report, 46% of landlords say their biggest challenge is dealing with service charges, coordinating communal repairs, or having no control over decisions and these limitations are influencing investment decisions.

The letting agency warns more than half of landlords who currently let out leasehold flats (58%) are reconsidering their position.

Allison Thompson, national lettings managing director at LRG, warns without leasehold reform, more landlords could avoid letting out leasehold flats.

She said: “Flats are a vital part of the rental market, particularly for first-time renters and young professionals. But many landlords are now telling us they simply cannot meet expectations in these properties because they do not control the wider building.

“This is not about unwillingness, it is about feasibility.”

Good landlords want to improve homes

The report also reveals half of landlords believe EPC rules should take into account whether leaseholders are legally able to carry out the necessary upgrades.

However, such works often require permission from freeholders or managing agents, which cannot always be guaranteed.

Costs are also a major concern, with upgrading a leasehold property to EPC C estimated at nearly £7,000, and potentially higher for older buildings and flats.

Ms Thompson adds: “Good landlords want to improve homes, but the leasehold structure often prevents meaningful action. Reform is essential if we are serious about raising standards and giving tenants the homes they expect.”