Axing of leasehold for new houses is good news

by Iain Mason

The controversial practice by developers of selling new houses as leasehold, which has left homeowners out of pocket to the tune of thousands of pounds, has been axed.

We’re delighted that the government has taken this step, because the ground-rents on these leaseholds have been nothing short of pernicious.

From now on, all new houses must be sold on a freehold basis unless there are exceptional circumstances. At the same time, ground-rents on new leases have been reduced to zero, to prevent homeowners being out of pocket.

The move is a result of a consultation by the Law Commission, which looked into the leasehold controversy. The proposals have already had a fundamental impact on the housing market since they were unveiled, with the sale of leasehold houses falling from 11% to just 2% this year.

There was much publicity about the huge costs homeowners had incurred. It also made selling on a house with a lease difficult, with buyers reluctant to take on a property with costly fees attached.

Communities Secretary James Brokenshire announced other measures to help the housing market:

• A new time limit of 15 working days and a maximum fee of £200 to make the home buying process quicker, easier and cheaper. This will stop freeholders and managing agents taking as long as they want – and charging what they want – to provide leaseholders with the vital information they need to sell their home.
• Renegotiation of Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.
• Where homeowners are incorrectly sold a leasehold home – saddling them with a property that could ultimately prove difficult to sell – they will be able to get their freehold outright at no extra cost.
• New proposals to make it easier for renters to transfer deposits directly between landlords when moving
• Measures to speed up planning applications.

We’re delighted the government has taken these steps, which should have a positive impact on the housing market.

If you need any help with buying or selling a property, or Help to Buy , please get in touch with the legal team here at Optimum.