Unfair' leasehold outlawed with new-builds sold as freehold

Most new-build houses in England are to be sold as freehold to stop unfair leasehold practices, the Government has confirmed.

The majority of new-builds will now no longer be sold as leasehold properties as the Government moves to crack down on what it regards as "unjustified selling" of new houses as leasehold.

As part of its commitment to reforming the housing market, the Government has launched a consultation into leasehold in England where around 4.2 million properties are leasehold. Most leasehold properties are flats or apartments.

In leasehold, a landlord or freeholder owns the land the property stands on and the property owner leases the use of the land for a specific period of time.

Leasehold means the property owner must also pay annual ground rent charges and property management fees. The consultation suggests that ground rents for any new leases will be capped at just £10. On average leaseholders pay more than £300 in ground rent annually, while some pay as much as £700.

In recent years, developers in England have sold new homes as leasehold and then sold the leases on to property management companies who often then impose onerous increases in the ground rent.

James Brokenshire, the Communities Secretary, announced the leasehold changes and consultation, saying: "The government is committed to making the economy work for everyone by helping people with the cost of living.

"Unfair ground rents can turn a homeowner's dream into a nightmare by hitting them in the back pocket and making their property harder to sell.

"That's why I'm taking concrete action to protect homeowners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds."

The consultation into leasehold will also look for the views of both leaseholders and freeholders on fair and appropriate exemptions to situations where leasehold new-builds are sold - for example, shared ownership properties and community-led housing.

There will also be more support for leaseholders who want to form a tenant association to enforce their collective rights and hold landlords to account.

Homeward Legal works with expert conveyancing solicitors across England and Wales who can deal with leasehold property purchases and sales. Our nationwide panel can also offer help to those who want to extend or buy out their lease.

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