Plans in place to abolish leasehold for all new homeowners
In a wide-ranging speech to the Chartered Institute of Housing conference in Manchester, the Rt. Hon. James Brokenshire MP confirmed plans to abolish leasehold in the selling of new houses in England and reduce ground rents for new leases to zero – putting cash back into the pockets of future homeowners.
All new-build houses will be sold as freehold in order to tackle the continuation of unfair leasehold practices and prevent future home-owners from being trapped in exploitive arrangements that have been witnessed in recent years.
The changes:
- Ground-rents on new leases to be reduced to £0 – preventing leaseholders being charged exorbitant fees for which they do not benefit from
- All new houses to be sold on freehold basis unless there are exceptional circumstances – ending unscrupulous practice of unnecessary leaseholds
- Immediate action to ban Help to Buy being used to support the purchase of leasehold houses
- If buyers are incorrectly sold a leasehold home, consumers will be able to get their freehold outright at no extra cost
To stop freeholders and managing agents taking as long as they want – and charging what they want – ministers will introduce a new time limit of 15 working days to provide leaseholders with information they need to sell their home and a maximum fee of £200 to make the home buying process quicker, easier and cheaper.
Homes England has been instructed to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances.
Other important proposals unveiled include extra funding for 19 new garden villages, and radical new measures to speed up planning applications.
NAEA Propertymark believes it is unfair that the thousands of existing leaseholders across the country are stuck and unable to sell their property. That’s why we have responded to many consultations in order to push for a reform.
Our Leasehold: A Life Sentence? report found that:
- 94% of leaseholders regret their purchase
- 93% would definitely not buy another leasehold
- 62% feel as though they were mis-sold
Yesterday, we reported on the Ground Rents (Leasehold Properties) Bill, which if passed will remedy the issues faced by existing leaseholders. Positive steps have been taken to stop poor practice continuing for future homeowners, we are now calling for legislative action to address problems faced by those currently living in leasehold homes.
Mark Hayward, Chief Executive, NAEA Propertymark, comments on the announcement that all new-build houses will be sold as freehold in bold move to tackle unfair leasehold practices:
“We welcome the announcement that all new-build houses are to be sold as freehold.
“These future practices are a huge step in the right direction towards fixing Britain’s broken housing market. However, we need to sought a robust solution for all those affected, as the issue remains at hand that existing leaseholders are still trapped in properties they can’t sell or remortgage which has led to three in five (62 per cent) feeling like they were mis-sold and we cannot leave them behind.”
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.”
NAEA Propertymark resources
NAEA Propertymark members can access multiple resources as part of their membership which aim to tackle tricky legislative changes and topics throughout the industry, guides and videos to help agents comply and understand more easily. We’ve created a comprehensive Understanding Leasehold guide to help members get to grips with the tenure. You can access these by logging into the members area.
NAEA Propertymark also offers courses that cover topics across the sector including an Understanding Leasehold Properties Intermediate level course.
What Propertymark is doing
NAEA Propertymark has long campaigned in order to see unfair leasehold practices reformed. We have responded to many consultations in order to push for change. Here are some of the responses NAEA Propertymark has submitted:
A full list of NAEA Propertymark responses can be found below.
To find out more about NAEA Propertymark’s extensive campaign to raise awareness on issues faced by leaseholders visit our Leasehold Lobbying page.
We have also put together a number of consumer guides for you to share with your customers and help them better understand what it means to be a leaseholder.
Kindly shared by NAEA Propertymark
