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Government unveils new build leasehold ban

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The Government has announced plans to ban the “unjust” practice of selling new build houses under expensive leasehold terms.

Last November it emerged that some property developers had been selling new-build houses on a leasehold basis with very expensive ground rents.

Some of the contracts saw ground rents double every 10 years.

Today the Department for Communities and Local Government announced an eight-week consultation on plans to crack down on the practice.

The DCLG says that, if left unchecked, consumers could be exposed to “unreasonable and long-term financial abuse”.

The department also proposes to reduce or cap ground rents, possibly at zero.

A statement from the DCLG says: “Ground rents are charged on all residential leasehold properties but evidence shows that they are becoming increasingly expensive.

“Under Government plans they could be reduced so that they relate to real costs incurred, and are fair and transparent to the consumer.”

The DCLG would also change the rules on Help to Buy Equity loans so that the scheme can only be used to support new build houses on “acceptable” terms.

Other proposals include closing other loopholes to protect consumers, such as contract clauses leaving some leaseholders vulnerable to possession orders.

Communities secretary Sajid Javid says: “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 now and in the future.”

The DCLG says that the terms of some leases are becoming increasingly harsh.

The department says it has seen examples of a family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060.

It adds that another example saw a homeowner being charged £1,500 by the company to make a small alteration to their home.

The DCLG has also seen case where a homeowner was told buying the lease would cost £2,000 but the bill came to £40,000.

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  • Victoria 31st August 2017 at 8:07 am

    Surely it’s service charges that needed scrapping or capping? Not ground rents.

  • Carl McGovern 25th July 2017 at 11:18 am

    I wonder where this will leave those that have already completed? Either the value of these homes are going to reduce, or there needs to be something put in place retrospectively. It is hard to believe this was allowed to happen in the first place.

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