Barnet Housing Director Notes Shift from Leasehold to Build-to-Rent

Developers in London are increasingly opting for build-to-rent, co-living, and student housing schemes instead of traditional leasehold flats, as buyer demand for the latter weakens. This trend was highlighted at a City Hall committee hearing where housing experts discussed the difficulties facing the capital's leasehold market.

Reasons for Market Shift

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Barnet Developers Shift From Leasehold Flats Amid Market Collapse

High service charges and cladding fears are driving a move towards build-to-rent and other tenures, Barnet Council has stated.

Housing experts identified a combination of factors contributing to the leasehold market's struggles. These include soaring property prices, rising service charges, and ongoing concerns over building safety. Luke Ward, Barnet Council's director for housing, economy and placemaking, told the London Assembly Housing Committee that developers are adapting by shifting towards alternative housing models that do not depend on individual flat sales.

Mr Ward stated that housing schemes which would have been sold as leasehold flats five or six years ago are now being delivered under different tenures. These include build-to-rent blocks, co-living developments, student accommodation, housing for older people, and affordable housing schemes, replacing developments previously marketed to owner-occupiers.

Leasehold Market Challenges

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Barnet residents face higher service charges as leasehold market shifts

London’s leasehold share remains high, prompting developers to favour Build‑to‑Rent and other models, while affordable‑home delivery lags behind targets

Despite continued demand for homes in London, the leasehold market faces significant headwinds. More than a third of London's housing stock is leasehold, with residents in the capital more than twice as likely as those elsewhere in England to own such properties. Last year, a London Assembly report indicated that London households paid average annual service charges of £3,912, leading to calls for increased regulation.

Mr Ward also pointed to 'reputational challenges' surrounding leasehold flats, such as concerns about cladding remediation and escalating service charges. Affordability remains a major obstacle for potential buyers, with London having the highest house price-to-earnings ratio in the country. The government has pledged to abolish leasehold for new developments, but this transition is expected to take time.

Campaigner Concerns and Building Costs

Campaigners argue that the leasehold flat market has effectively collapsed. Harry Scoffin, founder of Free Leaseholders, suggested that an increased reliance on build-to-rent developments risks creating a generation of long-term tenants rather than facilitating homeownership for Londoners. This warning comes amid broader challenges in delivering new homes across the capital.

Neil Davis, development delivery director at housing association L&Q, informed the committee that building costs in London are at an all-time high. He cited inflation, increased borrowing costs, supply chain pressures, and a shortage of construction workers as key contributing factors. These pressures have exacerbated London's housing shortfall, particularly in the affordable housing sector.

Analysis from the Centre for Cities think tank suggests that current government funding plans will only allow for the construction of affordable homes to meet 18 per cent of London's priority housing need by 2036, compared to 46 per cent in rural areas. Researchers are calling for a greater proportion of affordable housing funding to be allocated to the capital, given its acute housing pressures.