Developers could be banned from selling houses leasehold
LEASEHOLDS ON new-build houses could be banned under Government proposals to cut 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 homebuyers 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 now and in the future.”
More than four million people live in leasehold properties in England – around a quarter of which were leasehold houses, according to the Department for Communities and Local Government. 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.
Sir Peter Bottomley, co-chair of the all-party parliamentary group on leasehold reform, welcomed the crackdown but said action should be taken to help those with unfair existing leases.
The Conservative MP said: “Having control and hopefully abolition of unjustified and unnecessary fees, which would apply to existing leasehold as well as future ones, then I would argue that if not covered by existing law, there should be action taken by Parliament so that unfair existing terms or existing leases can be struck out as unreasonable.”
Changes will help make sure leasehold works in the best interests of homebuyers. Communities Secretary Sajid Javid.