Leasehold structures are limiting upgrades and pushing landlords away from buying flats, research from Leaders Romans Group (LRG) shows.
Some 46% of landlords with leasehold flats say their biggest challenge is dealing with service charges, coordinating communal repairs, or having no control over decisions.
Over a third of landlords (34%) actively avoid letting flats because of leasehold-related issues or the complexity of building management structures.
Allison Thompson, national lettings managing director at LRG, said: “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. 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.”
Leasehold restrictions are also affecting landlords’ ability to meet government energy efficiency targets.
Half of landlords believe EPC rules should reflect whether leaseholders are legally able to make the necessary upgrades.
This echoes concerns raised by Propertymark, which called leasehold restrictions a significant barrier to energy compliance in its consultation response.