Audit, Inspection and Safety

01.07.19

‘Exploitative’ sale of new-build houses as leaseholds outlawed by government

New-build houses will now be sold on a freehold basis, the government has announced, effectively outlawing the “unscrupulous practice of unnecessary leaseholds.”

All future homeowners will benefit in a “bold move to tackle unfair leasehold practices,” Ground rents on new leases are to be slashed to zero under the new regulations, preventing leaseholders from being charged soaring fees.

The move, announced by the communities secretary James Brokenshire, comes in the wake of ongoing controversy which has seen 100,000 facing extortionate ground rents and in some cases unsellable properties.

Developers have until now been able to take advantage of the leaseholders and trap them in “exploitative arrangements.”

Consumer groups have long-warned that buyers of leasehold houses and flats are being ripped off, and a recent survey from the National Leasehold Campaign revealed that 72% of leaseholders surveyed felt “very worried and anxious” about their future as a result of the leasehold problems.

Brokenshire has also instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.

Speaking in Manchester, the communities secretary commented: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market. Last year we consulted on proposals including the leasehold house ban and ground rent reduction.

“Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.

“And we will legislate to ensure that in the future – save for the most exceptional circumstances – all new house will be sold on a freehold basis.

“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows – helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.”

Image credit - Joe Giddens/PA Wire/PA Images

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