"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"
- Allison Thompson - LRG
Leasehold rules are creating growing challenges for landlords, according to new research from Leaders Romans Group (LRG). The findings suggest these restrictions are limiting upgrades to flats, discouraging investment, and reducing tenant confidence in building management.
LRG’s latest Lettings Report shows that 58% of flats let by landlords are leasehold. Among these landlords, 46% cite their biggest challenge as dealing with service charges, coordinating communal repairs, or having no control over decisions. These difficulties are influencing investment behaviour, with 34% now actively avoiding letting flats due to leasehold issues or the complexity of building management structures.
While 58% of landlords currently let at least one flat, many are reconsidering their position. Without reform, LRG warns that leasehold lettings could decline further, potentially reducing affordable housing supply at a time of high demand.
Tenant confidence affected
Only 39% of tenants surveyed said they had confidence in how their building was managed. Although the report did not measure attitudes towards landlords directly, the findings suggest dissatisfaction with flats is often linked to factors beyond the tenancy itself, particularly the upkeep and control of shared areas.
Impact on energy efficiency targets
Leasehold restrictions are also making it harder for landlords to meet government energy efficiency targets. Half of landlords believe EPC rules should take into account whether leaseholders are legally able to make required upgrades. This aligns with concerns raised by Propertymark, which described leasehold rules as a significant barrier to compliance in its consultation response.
Costs remain a challenge. UK Finance estimates the average cost of upgrading a property to EPC band C at around £6,800, with significantly higher costs for older buildings and flats. In leasehold properties, such works often require permission from freeholders or managing agents, and approval is not always guaranteed.
The National Residential Landlords Association (NRLA) has warned that the current government timeline for improving rental home energy performance is unrealistic, especially where building-wide improvements require consent.
"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," said Allison Thompson, national lettings managing director at LRG. "This is not about unwillingness. It is about feasibility. 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."
