Government plans to ban leaseholds on new-build homes

LEASEhOLdS on new-build houses could be banned under Government proposals to cut out abuses of the system.

homebuyers can face exorbitant costs and properties can be rendered unsellable because of leasehold fees, but plans put forward by the Communities Secretary aim to put a stop to “unjust” and “unnecessary” practices.

Sajid Javid wants to restrict ground rents to zero and prohibit future houses being sold as leasehold in England, after a rise in developers selling houses under terms which usually apply to flats, particularly in the North West.

The proposals, which are subject to an eight-week consultation, aim to make future leases fairer by reducing ground rents so they “relate to real costs incurred”.

The plans include measures to close legal loopholes to protect leaseholders who can be left vulnerable to possession orders, as well as changing the rules on help to Buy equity loans so they can only be used for “new built houses on acceptable terms”.

Mr Javid said: “It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents.

“Enough is enough. These practices are unjust, unnecessary and need to stop.” More than four million people live in leasehold properties in England around a quarter of which were leasehold houses.

They have a legal right to occupy and use the property for a set period, typically from 99 to 999 years, with certain conditions set out in the lease.

Leaseholders pay fees to the freeholder who retains legal ownership of the ground on which the leaseholder’s home is built.