The latest housing policy initiative has been announced by the Government’s Communities Secretary, James Brokenshire. He has confirmed plans to ensure the majority of new build properties are sold as freehold in future, doing away with leasehold and excessive ground rents.
The announcement said although the measure will not be retrospective, in future ground rents will be capped at a mere £10 per annum. At present, on average leaseholders pay more than £300 ground rent a year and this figure can be as high as £700.
Housing a priority for government
This latest announcement is part of the Government’s move to make housing a priority and improve legislation for homebuyers and tenants. This consultation will run for six weeks and estate agents will be invited for their specific industry views.
Mr Brokenshire said: “I’m taking concrete action to protect home owners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds. Unfair ground rents can turn a home owner’s dream into a nightmare by hitting them in the back pocket and making their property harder to sell.
“Under the Government’s proposals, which are subject to consultation, the majority of new houses will be sold as freehold, and future ground rents will be reduced to a nominal sum. The consultation will also seek views on what are the appropriate and fair exemptions, such as shared ownership properties and community-led housing to ensure consumers’ best interests are at the heart of the property market.
“While leasehold generally applies to flats with shared spaces, a number of developers have been increasingly selling houses on these terms – placing further financial burdens on those looking to buy a house of their own through unnecessary surcharges like ground rent. This can also mean that selling their home is more expensive and take longer than selling a freehold property.”
NAEA welcomes proposals
Mark Hayward, chief executive of the National Association of Estate Agents, said: “Thousands of home owners across the country are facing escalating ground rents, charges for making alterations to their properties and unable to sell their home. It’s only right that the Government looks to crack down on unfair leasehold practices to stop even more people feeling trapped in homes they cannot afford to continue living in.
“For too long, housebuilders and developers have not been transparent enough about what it actually means to buy a leasehold property. Our recent Leasehold: A Life Sentence? report found almost half (45%) of leasehold house owners didn’t know they were only buying the lease until it was too late, two thirds (62%) feel they were mis-sold and the vast majority (94%) regret buying a leasehold.
“This announcement is positive news for those looking to buy a leasehold property in the future. There are over 4.2 million leasehold properties across England and our industry should continue to review the current legislation across the board.”