new house leaseholds

Government threatens ban on new house leaseholds

Since 2000, the number of new house leaseholds instead of freeholds has more than doubled. Whilst leaseholds are not new, what is raising is concern is the increased use of it to raise income for developers and freeholders over time. Clauses allowing the freeholder to make charges for home improvements is one issue but particularly onerous are ground rents. With clauses allowing for doubling, every ten years, this can lead to house sales falling through.

Government concern

The government is already under pressure due to the housing shortage. Banning new house leaseholds will not solve the crisis but it is a step in the right direction. Unlike flats where there is a case for leaseholds in order to manage communal areas and the fabric, the same arguments do not apply to houses.

Industry View

Taylor Wimpey, a major UK developer has made an apology and set cash aside, others so far are less forthcoming. The House Builders Federation said: “The industry is committed to working with all parties to ensure that the terms on which leasehold homes are sold are fair and work for the homeowner.

One MP likens the situation to the bank’s PPI scandal. It looks as though other developers involved will be under pressure.

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