New measures to prevent ‘abusive’ leasehold practices

The government has announced new measures to prevent unfair and abusive practices within the leasehold system.

They include a ban on leaseholds for almost all new build houses.

Changes will be made so that ground rents on new long leases – for both houses and flats – are set to zero.

It will also become cheaper and easier for existing leaseholders to buy their freehold and there will be better information available about redress for those consumers who face the most onerous terms.

These measures follow a recent public consultation where there was an overwhelming response in favour of government plans to tackle the unfair practices in the leasehold sector.

There are more than 1.4 million leasehold houses across England and Wales.

Leasehold generally applies to flats with shared spaces, making multiple ownership more straightforward, but developers have been increasingly selling houses on these terms – adding further costs to over-stretched house buyers.

Communities Secretary, Sajid Javid said: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms. It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices.

Measures to be introduced include:

• legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership
• making certain that ground rents on new long leases – for both houses and flats – are set at zero
• working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper
• providing leaseholders with clear support on the various routes to redress available to them
• making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges.

Please contact Gurjit Dhadar or Dipak Odedra if you would like more information about the legal aspects of buying or selling a home.