BSA and CA call for leasehold change

Two major industry bodies are urging the Government to make vital changes to leasehold agreements.

Responding to the Government’s consultation on tackling unfair practices in the leasehold market, the BSA and CA are calling for change.

The Building Societies Association says it supports proposals to restrict the creation of new build leasehold houses. But the association warns that changes must not blight current leaseholders or exacerbate their existing issues.

Meanwhile, the Conveyancing Association is urging the Government to consider bringing in commonhold agreements in place of leasehold.

The trade body says the move could solve many of the problems in the sector such as escalating ground rents and freehold sales.

The association says leasehold should only be allowed where there are genuine share amenities at a property. It argues that a minimum lease should be set at 999 years with a peppercorn ground rent.

Following a survey of the 175 commonholders in England, the CA says the system ‘works well and the vast majority are happy with arrangement’. Those who have owned both leasehold and commonhold properties say they would choose the latter.

BSA head of mortgage policy Paul Broadhead says consumers need to be more aware of their rights.

He says: “Consumers should understand their options and recognise how to challenge terms when it comes to dealing with onerous ground rent and other potentially unfair elements association with leasehold homes.”

Broadhead says information should be easy available to leaseholders to help.

He says: “The increase in newly built homes being sold on a leasehold basis is rarely to the benefit of homebuyers. In too many cases, these properties are sold as leasehold solely to create an additional revenue stream for third party freeholders.”

Leasehold consultation

The Government launched a consultation into the leasehold market in July this year. It came after it emerged many homeowners were being hit with punitive ground rents and unfair clauses in their contracts.

The consultation aims to identify measures to help tackle ‘unreasonable abuses’ of leasehold arrangements.

The Government vowed to ban the ‘unjust’ selling of leasehold properties. Some mortgage providers have cracked down on leasehold lending as a result.

Broadhead says the Government’s focus on protecting consumers is ‘encouraging’.

He adds: “While these important improvements are needed, it is important that any Government changes do not blight current leaseholders or exacerbate their existing issues.”

Conveyancing Association director of delivery Beth Rudolf says: “We wanted to spell out the red lines that need to be drawn to ensure no leaseholder is left in the situation that many find themselves in, and which have hit the headlines in recent months.

“That means defining when leasehold can be used, minimum lease terms, peppercorn ground rents, reasonable fees and access to a redress scheme, among others.

“These proposals are all designed to ensure we have a much fairer and transparent process in place. The current system has clearly been abused. It is leasehold in its entirety that needs amending.”

Recommended

2

Tread carefully with lifetime lease options

Following the growing coverage of so called sell-and-rent-back deals, I’ve been approached by a number of colleagues who have come across similar plans.

Bridging and buy-to-let combination deal launched

UX Mortgages and bridging loan provider Tiuta has launched a combined bridge and buy-to-let mortgage with a joint application and underwriting process.The providers say the product – Dual – is the first to combine the two elements and to guarantee that the bridging loan will be transferred into a remortgage as a longer term option.It […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • james tate 21st September 2017 at 12:49 pm

    Freeholders have already planned to lose their golden egg by moving from leasehold to fleecehold.
    What is fleecehold you may ask well Fleecehold is when the developer either sells the freehold to the leaseholder or when the developer is told that new houses can no longer be sold leasehold he will then attach the onerous clauses to the new Freeholder. That is the creation of FLEECEHOLD and it is happening now.