Leasehold New Builds

Since December 2017 when the Government first put the wheels in motion to stop the sale of new build leasehold houses, there has been a push towards passing further legislation to protect the new build homeowner.

In a press release by the Ministry of Housing, Communities and Local Government the following changes have now been confirmed:

Leasehold houses

All new-build houses will be sold as freehold in a bold move to tackle unfair leasehold practices and prevent future home-owners from being trapped in exploitative arrangements, the Communities Secretary said today (27 June 2019).

Ground rents and leasehold flats

Whilst it is not possible to own the freehold of a flat (unless by way of a resident’s management company or enfranchisement), the Government have now released plans to abolish ground rents (particularly onerous or ‘doubling’ ground rents) by setting all future ground rents at zero.

Management/Leasehold information packs

The cost of obtaining vital management information that you are required to provide when reselling your new build home is set to be capped at £200, thus preventing landlords and management companies from profiting on each resale by charging over and above their reasonable costs. A new time limit of 15 working days for producing such documentation will also be introduced to prevent unnecessary delays on resale.

Purchasing your freehold

It has been announced that, where buyers were incorrectly sold a leasehold house they will be able to purchase the freehold to their property at no extra cost. Whether this stretches to the payment of legal fees has yet to be answered.

Communities Secretary Rt Hon James Brokenshire MP told the Chartered Institute of Housing conference:

‘We have long recognised that we have a responsibility to confront unfairness in the leasehold market. Last year we consulted on proposals including the leasehold house ban and ground rent reduction.

Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.

And we will legislate to ensure that in the future – save for the most exceptional circumstances – all new house will be sold on a freehold basis.

We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows – helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.’

It remains to be seen if and when the Government might pass similar protections in relation to freehold ‘service charges’ (otherwise referred to as estate rentcharges), which currently are not afforded the same legislative protections as leasehold properties!

For more information or if you are thinking of purchasing a new build property please contact our Residential Property Department on 01752 827936.

Ref: https://www.gov.uk/government/news/leasehold-axed-for-all-new-houses-in-move-to-place-fairness-at-heart-of-housing-market