In an announcement today (25.7.17), communities secretary, Sajid Javid, said that far too many homes are being sold as leasehold, which “exploits buyers with unfair agreements and spiralling ground rents”. He said that ground rents could be cut to as low as zero.
With 1.2 million houses currently recorded as leasehold in England, the problem is growing quickly and this action is seen as being crucial to make leases fairer for homebuyers.
The government’s proposals include:
- changing the Help to Buy rules so that only homes bought on acceptable terms can be purchased
- reducing ground rents – possibly to £0 – there have been cases where these have doubled every 10 ten years
- closing loopholes that leave people vulnerable to possession orders
As the government wants to make ground rents, which are charged on all residential leasehold property, fairer and more transparent to the customer, they could be reduced to cover real costs only.
Caroline Murray
The government has highlighted some recent cases in which people have had to pay thousands of pounds to the freeholder to make changes to their homes. These include:
- a company charging £1,500 to make a small alteration to a customer’s home
- a house made unsaleable because the ground rent is likely to be £10,000 a year by 2060
- a homeowner who received a bill for £40,000 to buy the lease on their property, despite being told it would be £2,000
There is now an 8 week consultation period, after which we will report again.
Caroline Murray, partner and head of property law.
