Yesterday, James Brokenshire announced Government plan to consult on improving the leasehold sector, and bring an end to poor leasehold practices for homebuyers once and for all.
The consultation, which launched today, proposes the majority of new houses be sold as freehold, with annual ground rents on new-build leasehold properties to be capped at just £10 – ending unscrupulous practice of unnecessary and escalating charges.
If adopted, the cap will significantly cut costs for leasehold homeowners, who currently pay an average of £300 a year, with some paying as much as £700, according to the Ministry of Housing, Communities and Local Government.
In addition, landlords will be required to provide contact information of eligible leaseholders to the secretary of the residents’ association within four months of the request, providing that leaseholders have expressly consented to their details being shared.
The Government says the move will help leaseholders act together to represent common interests and raise complaints with their landlords and agents for things such as service charges and management practices.
James Brokenshire MP, Secretary of State for Communities, said: “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.”
Commenting on the announcement, NAEA Propertymark Chief Executive, Mark Hayward, said: “Thousands of homeowners across the country are facing escalating ground rents, charges for making alterations to their properties and unable to sell their home. Therefore, it’s only right the Government looks to crackdown on unfair leasehold practices to stop even more people feeling trapped in homes they cannot afford to continue living in.
“Our recent Leasehold: A Life Sentence? report found almost half (45 per cent) of leasehold house owners didn’t know they were only buying the lease until it was too late, two thirds (62 per cent) feel they were mis-sold and the vast majority (94 per cent) regret buying a leasehold. This shows that for too long, housebuilders and developers have not been transparent enough about what it actually means to buy a leasehold property.
“However, this announcement is only good news for those looking to buy a leasehold property in the future. With 4.2 million leasehold properties in England, many will remain stuck in their lease with no straight forward way out and the industry needs to help them.”
The consultation will run for six weeks, and is open to all, including leaseholders, freeholders, landlords, solicitors, conveyancers, management companies, developers, local authorities, estate agents, investors and lenders.