28/07/2017
A ban on new-build houses being sold as leasehold and restrictions to prevent ground rents spiraling out of control are among measures proposed by the Dept for Communities to tackle the exploitation that is currently making some leasehold homes unsaleable.
While leasehold generally applies to flats with shared spaces, developers in the North West in particular have been selling houses on leasehold. 1.2m leasehold houses are currently recorded in England and the number is rapidly growing.
As the size of the market has increased, more and more cases of home buyers being exploited by unfair agreements have come to light. Recent examples include
- a homeowner being charged £1,500 to make a small alteration to their home
- a family house that has become unsaleable because the ground rent is expected to hit £10,000 a year by 2060
- a homeowner who was told buying the lease would cost £2,000 but the bill came to £40,000
‘Tackling unfair practices in the leasehold market’ – which links to the government’s White Paper ‘Fixing our broken housing market’ – seeks views on measures to
- prohibit the sale of new build leasehold houses where the developer is not obliged to sell a house on a leasehold basis
- restrict ground rents on new leases to a ‘peppercorn’
- tackle existing onerous ground rents
- possibly change the Help to Buy scheme in relation to leasehold houses
- close legal loopholes that, for example, leave some leaseholders vulnerable to possession orders
- provide freeholders on private estates with equivalent rights to leaseholders to challenge unreasonable service charges for the upkeep of communal areas and facilities via the First-tier Tribunal (Property Chamber)
Making it Easier for Tenants’ Associations to gain Recognition
Proposals to impose a new duty on landlords to provide secretaries of tenants’ associations with contact information about qualifying leaseholder tenants are intended to make it easier for the associations to qualify for formal, written recognition from either the landlord or the First-tier Tribunal (Property Chamber).
‘Recognising residents’ associations, and their power to request information about tenants’ explains that this recognition will give the association more rights than individual tenants in dealings with landlords, including the rights to
- appoint a surveyor to advise on matters relating to service charges
- ask for a summary of service charge costs and inspect accounts and receipts
- ask to be consulted about the appointment or re-appointment of a managing agent
- ask for a summary of insurance cover