Housing Minister caps ground rent for new leases at £10

October 15, 2018 / Isla MacFarlane
Housing Minister caps ground rent for new leases at £10

The vast majority of new-build houses are to be sold as freehold and ground rent is to be capped at a peppercorn amount in a move to tackle unfair practices in the leasehold sector.

Communities Secretary Rt Hon James Brokenshire MP will today (15 October 2018) launch a consultation on plans to improve the leaseholder sector for would-be home owners, which will bring an end to the selling of new houses as leasehold.

The consultation will also propose that ground rents for new leases will be capped at just £10. On average leaseholders pay over £300 ground rent each year, with some paying as much as £700.

These measures will build upon comprehensive action by the government to make the housing market fairer for everyone.

This includes helping existing leaseholders who want to buy their freehold by working with the Law Commission to make this process faster, fairer and cheaper, and ensuring tenants are not hit by unfair rental costs.

The Rt Hon 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.”

While leasehold generally applies to flats with shared spaces, a number of developers have been increasingly selling houses on these terms. This can also mean selling their home is more expensive and take longer than selling a freehold property.

The consultation will also seek views on what are the appropriate and fair exemptions, such as shared ownership properties and community-led housing to ensure consumers’ best interests are at the heart of the property market.

To further support leaseholders, ministers have also made it easier for them to form recognised tenant associations by reducing the minimum membership required. This will further empower those in leasehold homes to enforce their collective rights and hold landlords to account.

Mark Hayward, Chief Executive, NAEA Propertymark, commented, “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%) of leasehold house owners didn’t know they were only buying the lease until it was too late, two thirds (62%) feel they were miss-sold and the vast majority (94%) 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.”

Did you like this? Share it: