Wales introduce new leasehold criteria for Help to Buy
New measures have been introduced to tackle leasehold concerns in Wales after widespread criticism of poor practice by developers.
Wales’ Housing and Regeneration Minister Rebecca Evans announced a package of measures last week, including the launch of a conveyancing accreditation scheme and an agreement from major housebuilders to ensure that leasehold contracts are only used when necessary.
Developers in Wales will now no longer be able to receive Help to Buy funding for new houses sold as leasehold unless they can present a legitimate reason for retaining the freehold.
The criteria, which has already been agreed to by Redrow, Taylor Wimpey, Bellway, Barratts, and Persimmon, sets out a new minimum standard for houses and flats which qualify for support under Help to Buy – Wales.
- the developer muct present a genuine reason for a house to be marketed as leasehold;
- leasehold contracts should meet minimum standards, including limiting the starting ground rent to a maximum of 0.1 per cent of the property’s sale value; and
- leasehold agreements will run for a minimum of 125 years for flats and 250 years for houses.
With many of the big hitters already on board, the Welsh Government is hoping that other builders will make the same commitment to cease the practice. The criteria will also apply to smaller home builders who receive affordable loans through the Wales Property Development Fund.
The Help to Buy Wales – Conveyancer Accreditation Scheme will ensure that trained and registered conveyancers provide clear advice to all Help to Buy – Wales purchasers. This is designed to ensure that home buyers are properly advised of the implications of their agreements and other ongoing commitments. As well as Help to Buy – Wales buyers, other home buyers will be able to make use of their services.
The scheme already has 150 trained members across Wales signed up, and a full list of accredited conveyancers will be available on the Help to Buy – Wales website and from home builders and financial advisers who use the scheme.
MP Rebecca Evans commented:
“I am delighted that major home builders such as Taylor Wimpey, Bellway, Barratts, Redrow and Persimmon will no longer offer houses for sale on a leasehold basis, unless absolutely necessary. I look forward to other developers making the same commitment.
“These measures have been developed in co-operation with the industry through our House Builder Engagement Programme including the Home Builders Federation and Federation of Master Builders.
“We have acted swiftly to take targeted and tangible action over concerns about leasehold sales on newbuild homes, and where leasehold is already the tenure, I am setting up a new group to recommend reforms to the system. I intend to put in place a voluntary Code of Practice to underpin these measures, improve standards and to promote best practice.
“This is only the start of my plans to address concerns around leasehold. I have not ruled out the possibility of legislation in the future, which may well be needed to make leasehold, or an alternative to it, fit for the modern housing market.”
Kindly shared by NAEA Propertymark