Government launches crackdown on unfair leasehold practices

22nd December 2017

Government launches crackdown on unfair leasehold practices

The Government has announced a proposed crackdown on unfair and abusive practices within the leasehold system – including a ban on leaseholds for new-build houses.

Changes will also be made so that ground rents on new long leases – for both houses and flats – are set to zero.

The measures include provisions that will make it cheaper and easier for existing leaseholders to buy-out their freehold and there will be better information available about redress for those who face the most onerous terms.

The changes follow a recent consultation where there was an overwhelming response in favour of Government plans to tackle the unfair practices in the leasehold sector.

This came about after the scandal of “doubling” ground rents emerged, in which the sum payable to the freeholder doubles every ten to 25 years, rendering them unsellable, with some lenders refusing mortgages for them.

There are 1.4 million leasehold houses across England and the number of leasehold sales is rapidly growing.

Announcing the measures, Communities secretary Sajid Javid said: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.

“It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this Government is now putting in place will help create a system that actually works for consumers.”

The move to ban leaseholds will not retrospectively affect houses which currently have such contracts. The average ground rent paid is £371, according to Direct Line.

The ban on new build leasehold houses will not apply in some situations, the Government said, such as when a property has shared services or are built on land with certain restrictions.

What is leasehold?

• You only own a leasehold property for a fixed period of time.
• You’ll have a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’. This tells you how many years you’ll own the property.
• Ownership of the property returns to the landlord when the lease comes to an end.
• Most flats are leasehold. Houses can be leasehold too and usually are if they’re bought through a shared ownership scheme.

How can Gotelee help?

If you are considering buying a leasehold property, Gotelee’s Conveyancing team can provide expert advice to prevent any nasty surprises further down the line.

Leases vary from one property to another so it’s important that you understand all of your legal rights. You’ll want to know how long the lease has left to run, whether you are allowed to make any improvements to the property, and who is responsible for ongoing maintenance costs.

We can guide you through the process and answer any questions you may have.

To find out more, visit us at one of our offices in Ipswich, Hadleigh, Felixstowe, Woodbridge or Melton, or call us on 01473 211121.

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