Clampdown leasehold practices


The government is looking to end the unfair abuses of leasehold that have been forcing homeowners to fork out increasing rental payments on top of their mortgages.

Traditionally leasehold applies to flats with shared spaces as a way of enabling the owner of the building to pay for its upkeep. However, a worrying trend by developers to sell new homes as leasehold, rather than freehold, some with extortionate ground rent charges, has led to accusations of unscrupulous, feudal practices with people charged as much as £10,000 a year.

Very often buyers, many of whom haven’t fully understood the implications of buying a leasehold property, are stung by sharp increases in the ground rent, which can render their home unsellable.

The problem is thought to be particularly acute in the north-west – Cheshire, Greater Manchester, Lancashire and Merseyside – where developers have been increasingly selling houses as leasehold that would traditionally have been freehold, with clauses that allow the ground rent to rise dramatically in later years.

With 1.2 million leasehold houses currently recorded in England, Communities Secretary Sajid Javid has set out plans to ban new-build houses being sold as leasehold saying: “Enough is enough. If housebuilders aren’t prepared to step off the ground rent gravy train, I’ll derail it for them.”

The government consultation paper published this week also outlines plans to restrict ground rents to as low as zero, close legal loopholes to protect consumers and change the rules on Help to Buy equity loans so that they can’t be used for leasehold homes.

The proposed steps are certainly needed to make future leases fairer but as yet there are no specific proposals to help those with existing leases who find themselves subject to inflated ground rents.

The terms of the leasehold will have been set out in the contract, but it is not uncommon for buyers to find such documents impenetrable and in their eagerness to purchase their dream home, they may not have fully understood the implications.

The consultation on leasehold lasts for eight weeks from Tuesday 25 July 2017.

If you are buying a property, whether leasehold or freehold, it is vital that you speak to an expert residential property solicitor who can guide you through the process. For a chat about leasehold or any aspect of conveyancing, give Beswicks Legal a call on 01782 205000 or email