According to the latest research, the price premium being paid for freehold properties by UK homebuyers has reached its highest level since 2011.
The analysis which was conducted by Letting and Estate Agent Benham and Reeves found that the price gap between leasehold and freehold properties has increased notably over the past twelve months.
The gap was 14.3 per cent at its peak in 2011 and then began to drop consistently year on year to just 5 per cent during 2014. It increased to 6.9 per cent in 2015 and had stayed close to that level until increasing last year as a result of the leasehold scandal.
Since then it has increased again to a notable 12.3 per cent this year.
Freehold properties have traditionally been the preferred method of buying a home as it means the buyer owns the property and the land it sits on.
However, last year a leasehold scandal saw new homes sold with soaring ground rents as a result of developers selling freeholds behind the back of sellers, which has led to homebuyers paying a premium to avoid these situations.
The largest freehold price gaps are in London high-end market, with Camden home to the highest with a 227 per cent increase, whilst Chiltern is home to the largest freehold price premium outside of the capital at 105 per cent.
Despite last year’s revelations, there are still two areas where homebuyers are paying more for leasehold homes. Tameside and Sunderland are home to an average price paid for leasehold homes some 6 per cent and 4 per cent higher than freeholds.
Director of Benham and Reeves, Marc von Grundherr, said: “There is no doubt that the leasehold scandal has had a severe impact on buyer sentiment and the amount people are willing to pay to avoid any of the potential nightmares that unfolded last year.
“A freehold is always the preferable path when buying but unfortunately, not everyone can secure themselves a foot on the freehold ladder, either due to a lack of stock or the additional financial cost.”