Leasehold on new build homes is to be outlawed under newly proposed government plans whilst ground rents could be dramatically reduced subject to a public consultation.
Currently leaseholders can cripple home owners with surging rents making their property difficult to manage and sell with uncertainty to what the freeholders can charge.
Usually, leasehold property would be available flats and apartments where a managing company or developer holds the freehold of the building whilst the owners of each property will get a leasehold of anything up to and over 100 years. A rise in developers deciding to keep the freehold on housing estates they have built on thus charging occupiers what they like has led to an outcry from the government which is likely to put an end to uncertain rental charges.
Traditionally someone who owns a property outright including the land it is built on is the freeholder but in some cases like shared-ownership, properties can be leasehold. Leaseholders have to pay the freeholder ground rent and sometimes other fees in order to make changes to their home and when the lease ends, ownership returns to the freeholder unless the property owner extends the lease. Freeholds can be brought outright but costs can be extensive.
The government plans would stop any new builds being marketed this way allowing freedom for all property owners with less legal land restrictions in place.
Communities Secretary Sajid Javid today stated that “Too many new houses are being built and sold as leaseholds, exploiting home buyers with unfavourable agreements and spiralling ground rents. These practices are unjust unnecessary and need to stop.
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Daniel Peacock