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Nationwide cracks down on leasehold lending

Nationwide is to crackdown on new-build lending to help homeowners being trapped in unfair leasehold agreements.

The building society has announced plans to introduce new requirements to help protect homeowners buying new-build leasehold properties.

It comes after fears that homeowners are being tied into unfair leases, which have seen the ground rents on some properties double every five years.

Nationwide says it wants to impose fairer and more transparent lending conditions on these homes.

From 11 May leases on new-build transactions will have be for a minimum of 125 years for flats and 250 years for houses.

Ground rents must be equivalent to a maximum of 0.1 per cent of the property value and must be ‘reasonable at all times during the lease term’.

Nationwide says unreasonable multipliers such as doubling every five, 10 or 15 years will not be allowed. Instead, any increase in ground rent will have to be linked to a verified index, such as the Retail Price Index.

The action by the building society comes as pressure mounts on developers selling new-build leasehold properties who then sell on the freeholds to third parties.


Nationwide head of property risk, data and strategy Robert Stevens says: “We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled.”

The changes will apply to new applications on new build transactions with Nationwide and The Mortgage Works, and will not apply to properties being sold second hand.





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  • Des Platt 5th May 2017 at 1:02 am

    Well done to Nationwide on this. For many years, I’ve felt they are more like a bank than a mutual but these near criminal freeholders do need to be stamped on ; hope other lenders follow their lead here