Developers sign pledge for fairer leasehold system
Some of the UK’s biggest property developers have committed to freeing leaseholders who are currently trapped in “onerous deals”.
House-builders include Taylor Wimpey, Barratt Homes and Bovis have signed a government-backed pledge that will close the legal loopholes that mean homeowners living in leasehold properties are paying unjustified legal fees.
Potentially expensive tenure
More than 40 leading developers and freeholders will now do away with the “doubling clauses” that mean the annual ground rents paid by a leaseholder to a freeholder can soar to unaffordable levels in a short time.
The system in England and Wales means that a homeowner does not own the land on which the property is built but instead rents this from the freeholder (or landowner) for a specific period of time. The lease will often run for decades with some set at 999 years.
However, buying leasehold can be expensive because a homeowner must then pay ground rent to the freeholder for the entirety of the lease.
Practice attracted criticism
Of the estimated 4.2 million leasehold properties in England, the majority are flats or apartments.
However, the recent practice among housebuilders of selling new-build homes as leasehold has attracted criticism from campaigners and politicians. Many developers sell the leaseholds on to specialist property firms who are then at liberty to increase ground rents via the doubling clauses, leaving homeowners facing annual bills running into thousands of pounds.
Closing legal loopholes
This week Government ministers announced plans to close legal loopholes that can be costly for leaseholders who challenge rises in fees.
Housing Minister Heather Wheeler said:
“We want to make sure we have a leasehold system where people are able to challenge exorbitant rates and high service charges.
“It is unacceptable that the burden of legal fees is preventing people from seeking justice.
“The plans announced today will stop leaseholders from picking up the tab for unjustified legal costs.”
Committed to change
The freeholders who have signed the pledge on leasehold fees have committed to changing the terms of the leases for affected homeowners, while managing agents have also said they will act more fairly and transparently in dealing with leaseholders.
Stewart Baseley, executive chairman of the Home Builders Federation, said:
“The home building industry is committed to ensuring that leasehold is used appropriately and remains a safe and secure tenure for homeowners.
“The pledge is a further demonstration of the industry’s intent to provide home buyers with clarity, transparency and security, ensuring that, when used, the terms and conditions of leases are fair and proportionate.”
Kindly shared by Homeward Legal