Government to ban leaseholds on new-build houses
2 min read
The Government wants to ban new-build houses in England being sold as leaseholds, Sajid Javid has announced.
The Communities Secretary has also set out proposals to crack down on the rent charged to leasehold owners.
The Department for Communities and Local Government said 1.2 million houses in England were currently operated on leasehold terms, which means the property-owner has to pay “ground rent” to the freeholder who holds the land.
It said developers had been “increasingly selling houses on these terms”, as opposed to flats which are more often associated with leaseholds.
Mr Javid has today unveiled plans to clamp down on the “unjust and unnecessary” practices associated with freeholds.
Among the proposals, which will be subject to an eight-week consultation, are a ban on new houses being sold as leaseholds other than in “exceptional circumstances”, and clamping down on ground rent so that it reflects the “real costs incurred”.
Mr Javid said: “It's clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents.
“Enough is enough. These practices are unjust, unnecessary and need to stop.
“Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.”
The Government’s action comes after pressure from MPs in all parties for action on leaseholds.
Shadow Housing Minister John Healey wrote for PoliticsHome in February calling on the Government to tackle the “blind spot” on the “unfair and unjustifiable” system.
The House Builders Association has responded to the announcement saying: "Rather than completely outlawing leaseholds on new-build homes, the Government ought to explore ways to make the system fairer in a manner that works for people." Read the full response here.
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