Leaseholds On New-Build Homes Set To Be Banned
The Leasehold Knowledge Partnership campaign group estimates building firms make £300million to £500million a year from the sale of ground rent agreements to investors.
Developers often sell these contracts on to investors who can demand huge sums from families wanting to buy the freehold to their home.
In 1996 only 22 per cent of new builds were leasehold, but by 2015 this had increased to 43 per cent.
Many of these leases see ground rents rise in line with inflation. But some include a clause that doubles the fee every decade, hammering family finances and trashing the value of the property.
Such an arrangement would see a ground rent that starts at £250 a year today rise to £500 a year in ten years, £1,000 a year in 20 years and £2,000 a year in 30 years.
Unless a cap is put in place, in theory this ground rent would cost more than £8million a year after 150 years.
Leasehold homes have been dubbed ‘the PPI of the housebuilding industry. The consultation process on ending leaseholds for new houses has been launched.
Government sources said officials are looking at ending the use of leasehold for new developments of houses as well as setting a minimum lease length for new flats, ‘offering leaseholders greater security and saving them money over the long term’.
‘It’s unacceptable that homebuyers are being exploited with unfair charges and unfavourable ground rent agreements. We will take action to tackle all unfair and unreasonable abuses of leasehold.’
But ministers are now looking at going even further and banning developers from selling leasehold houses on land they own, meaning buyers will be handed the freehold and own the property outright.
“We look forward to seeing the outcome of the consultation on this issue” say’s Greengates Builders Merchants Accrington, Lancashire.
Information from the Daily Mail