More than a third of flats may be unsellable, MPs have been warned.

Speaking in front of the Housing, Communities and Local Government Committee in Parliament this week, Harry Scoffin, of campaign group Free Leaseholders, said: “There is a crisis in the flats market at the moment. People cannot sell. They cannot move on.”

The warning follows research published earlier this week by Hamptons, which suggested that 37 per cent of flats have a service charge that is 1% of the property price.

Lenders will often restrict or refuse mortgages on flats with high service charges, particularly if they exceed 1% to 2% of the property’s value.

Leaseholder flat crisis

“What that means is those flats are unmortgageable. They are unsellable,” explained Scoffin at the Select Committee taking evidence on the Commonhold and Leasehold Reform Bill.

What that means is those flats are unmortgageable. They are unsellable.”

He said existing leasehold flat owners were facing a crisis and risked being left behind by reforms to boost the uptake of commonhold for new properties.

“Everyone is going to rush to commonhold flats and those of us left in existing leaseholders are going to be trapped,” he added.

High service charges

He urged the Government to go further to ensure existing leaseholders could move to commonhold or buy the freehold of their homes.

Hamptons research found that the average service charge paid by flat owners last year was £2,405, up 4.6% on 2024.

It said service charges for flats topped £200 a month for the first time last year.

The average service charges has risen 32.6% in the past five years and 55.6% in the past decade, outstripping inflation.

The Government has insisted that it is ending the feudal leasehold system and easing the cost of living pressures for millions of leaseholders across the country.