Tories to ban ‘feudal’ leasehold charges on new build homes

MINISTERS will today unveil plans to ban “feudal” leases on houses that force families to pay exorbitant ground rents and fees.

Sajid Javid, the Communities Secretary, will announce that all new build houses will not be allowed to be sold as a leasehold to stop landlords from “exploiting” home buyers.

He will pledge a crackdown on unfair annual ground rents – the cost the leaseholder as a tenant pays to the person or company that owns the freehold on a property – and outline measures to restrict the payments on new leases to “peppercorn” rates.

The Government will also consider what it can do to help the millions of existing leaseholders who face “onerous” annual payments. Mr Javid previously described the leasehold system as “practically feudal” and announcing the proposals, he 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.

“Our proposed changes will help make sure leasehold works in the best interests of homebuyers.”

Leasehold is primarily used for properties that share a single space or which have shared services, such as a block of flats. However, it is being increasingly used for new build houses as landlords look to take advantage of the guaranteed income stream that ground rent can provide.

But there are concerns landlords are increasing ground rents by huge amounts, hitting families in the pocket and making properties almost impossible to sell. Recent cases have included a house where the ground rent is due to hit £10,000 a year by 2060.