Real Estate Insights The clash of politics and economics in the UK property market–the case of leaseholds

Abstract

PurposeThe aim of this Real Estate Insight is to comment upon the UK leasehold system, particularly focussing on new-build homes. This paper sheds light on the controversy surrounding this practice, public perception and the impact of a proposed ban on the housing and the impact, thereof, on property investment.Design/methodology/approachThis Real Estate Insight, through the lens of investment principles, dissects the rationale behind the initial pricing in the leasehold system and how potential future costs and benefits shape this mechanism. The nature of the “Insights” briefings means that this is a personal view of the author.FindingsWith the recent outcry over perceived unfair practices, the paper scrutinises whether the problem lies within the system itself or in the consumers' comprehension of the system. This paper suggests that enhancing consumer education and imposing stricter disclosure requirements might serve as a more effective solution than outright legislative prohibitions.Practical implicationsThe paper also briefly touches upon the concept of “gouging” in market function, highlighting potential inconsistencies in consumer behaviour.Originality/valueThis is a review of the UK leasehold market in relation to the legal title being offered at purchase.