More than 40 leading property developers and freeholders have signed a government-backed pledge to crack down on “toxic” leasehold deals.
The pledge focuses on preventing leaseholders being trapped in unfair and costly deals – the focal point being “doubling clauses” and “event fees”.
Those who have signed the pledge have committed to changing the terms of leases for those who are affected.
According to the government, a number of managing agents have also put their names down, agreeing to act fairly and transparently in their dealings with leaseholder.
Furthermore, ministers have announced plans to close the legal loopholes that force leaseholders to pay for the legal fees of their landlords when they take them to court over doubling clauses and similar others.
Earlier this week, the HomeOnwers Alliance said that the majority of UK adults believe that the leasehold system is a serious problem. This followed news that the housing, communities and local government committee called on the government to reform the current system.
Communities Secretary James Brokenshire comments: “Since becoming communities secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market.
“The new industry pledge will further support existing and future leaseholders by protecting them from onerous fees.
“I want to see others who have not yet signed up do the right thing.”
Housing minister Heather Wheeler adds: “We want to make sure we have a leasehold system where people are able to challenge exorbitant rates and high service charges.
“It is unacceptable that the burden of legal fees – potentially running into tens of thousands of pounds – is preventing people from seeking justice.
“The plans announced today will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone.”
UK Finance principal of mortgage policy Matthew Jupp says: “This announcement is a positive step for customers that should deliver better outcomes for both existing and future leaseholders.
“Mortgage lenders share the government’s concern with poor practices in the leasehold market, including the rapid escalation of ground rents, and many have already taken action to help prevent unfair leasehold terms for new buyers.
“UK Finance will continue to work with the government, regulators and industry and to ensure the wider leasehold market works well for all.”
NAEA Propertymark chief executive Mark Hayward comments: “Today’s news is a victory for those stuck in leases with onerous ground rent payments, charges for making alterations to their properties, and ultimately, unable to sell their homes.
“Our ‘leasehold: a life sentence’ report found that 45 per cent of those who bought a leasehold house in the last ten years, did not realise they were only buying the lease until it was too late.
“As a result, 62 per cent feel like they were mis-sold, and the vast majority, 93 per cent, say they definitely would not buy another leasehold property.”