The 1.5 million homes left behind

House prices will fall and properties will become unrentable in ultra-fast broadband blackspots, writes Melissa Lawford

Hundreds of thousands of landlords face their properties falling in value and becoming unrentable and almost unsellable because of poor internet speeds.

One and a half million households are stuck in broadband blackspots and may never be connected because freeholders are blocking access to Britain’s £15bn broadband upgrade.

Owners of these badly connected homes face price falls of 6pc because of low speeds, equal to £ 31,800 in London. These properties will increasingly lose value as more of the country is hooked up to high-speed internet while they are stuck far behind. Landlords will struggle to find tenants and may have to accept lower rents, experts have warned.

Openreach, which manages the cables that connect most of Britain to the internet, is spending £15bn to upgrade 25 million homes to full fibre broadband by the end of 2026. This means that households will see their internet speeds soar from a typical 30Mbps to 1,000Mbps.

But Openreach is having major problems making upgrades to flats in large blocks because it cannot get permission from the owners of the buildings. Of the 2.5 million flats it hopes to upgrade, it estimated that 60pc, or 1.5 million homes, will be unreachable.

These flats will soon become blackspot homes where residents will have internet speeds that are 33 times slower than the rest of the country.

Openreach needs permission from the building owner to run a fibre optic cable to the outside of the property and to connect it to a box inside. But renters and leaseholders are being denied upgrades because their landlords and freeholders cannot be reached.

Matt Bateman of Openreach said that of the properties it is unable to access, 60pc to 70pc cannot be upgraded because the owners are small-scale buyto-let landlords. These investors risk missing out on free internet improvements worth up to £550 per property.

“The first issue is actually finding out who the landlord or freeholder is,” said Mr Bateman. “There is no central register, these properties change hands at an extraordinarily fast rate and a lot of them are held by offshore companies.”

After the challenge of identifying the owner, Openreach then faces a struggle to contact them and get permission. “Often we have got the right person but we just don’t get a response from them. Even if we do, they have no obligation to allow us to make the upgrades.”

So far, Openreach has tried to make contact with the owners of 600,000 flats. In 300,000 cases, it has hit a wall.

Tracey Knott, 54, is a small- scale landlord with a leasehold buy-to-let flat in Birmingham that has a connection that is even slower than the average. “The internet speed is 7Mbps. It’s not much better than dial-up. It’s an absolute nightmare,” said Ms Knott.

In July last year her tenant started trying to get the property’s internet upgraded. But Openreach cannot install full fibre without a permission form from the freeholder, Persimmon, the housebuilder. Ms Knott stepped in in January. She has chased the building’s managing agent, Gateway, every fortnight but has got nowhere. When her tenant leaves this year, Ms Knott is worried that she will struggle to find new tenants because of the low internet speed. “I’d probably have to look at taking £50 off the monthly rent,” she said.

Longer term, as more and more properties get faster internet, she is worried the property could become unrentable. “If everyone else has 1,000Mbps, I will only be able to let to people who don’t use the internet. And I’ve yet to meet anybody who doesn’t,” said Ms Knott.

Once Openreach has upgraded the majority of homes to full fibre, the gulf between properties will be extreme.

“Speeds of 30Mbps are sufficient for people’s needs today. But the way we live and work will accelerate as 1,000Mbps becomes normal,” said Mr Bateman. The gap will amount to internet poverty, he warned. It is also likely to prompt house price falls. Research by the London School of Economics suggests an upgrade from 30Mbps to 1,000Mbps would bring a price premium of 3pc – an uptick of £8,310 on a typical home.

Gabriel Ahlfeldt from the LSE said this premium would be higher in urban areas that rely heavily on internetbased services. In London he estimated the premium at 6pc, equivalent to an extra £31,800 on the value of an average home in the capital.

Once Openreach’s rollout is complete and the majority of homes have full fibre, the price difference would not be a premium but a discount, he warned.

“A fast and reliable broadband connection will soon be universally expected. If a good broadband connection cannot be offered, sellers and landlords will have to be willing to accept significant price and rent discounts,” said Mr Ahlfeldt. This could amount to a drop of between 3pc and 6pc, depending on the location.

Vanessa Hale of Strutt & Parker estate agents said the shift to homeworking meant that broadband was more integral to people’s homes searches than ever. “According to our research, 47pc of homeowners wouldn’t consider moving to a house without good broadband,” she said. “Homes that don’t have a first-rate broadband connection will be deemed undesirable. People will expect it to be there, and if it’s not there and they can’t get it, it will make it much harder to sell the property.”

Because upgrades to full fibre depend on permission from the building’s freeholder, the problem will be inherited by the new owner when the property is sold. Buyers will have no ability to make the upgrades themselves. “Working households will require 1,000Mbps. It’s like how in the old days loos were outside but now they’re indoors. In five years’ time everyone will expect full fibre, particularly in city locations,” said Ms Hale.

A Persimmon spokesman apologised for the difficulties at its property. “Given the unacceptable delay, we have contacted both Openreach and Gateway to try to resolve any outstanding issues and will work with them to ensure the necessary approvals are granted as soon as possible,” the spokesman said.