Government outlaws sale of new homes as leasehold

All new homes built in England will be sold as freehold except in exceptional circumstances, under a new law introduced by the government.

The Government has announced an immediate ban on selling homes with an unnecessary leasehold and reduced ground rents on new leases to zero.

End to unscrupulous practices

The move is the latest in a long battle by homeowners in England against what have been deemed unscrupulous practices by house builders, who sell new homes as leasehold and then sell on the leases to private contractors who often impose onerous ground rent and management charges.

Housing Minister James Brokenshire confirmed the new regime in a speech to the Chartered Institute of Housing conference on June 27.

Speeding up conveyancing

Another new measure aimed at speeding up the process of selling a home will be to impose a 15-working-day limit and maximum £200 fee on leasehold companies providing the information on a leasehold property that is being sold.

The leasehold management pack is an essential part of the conveyancing process; without it, a buying solicitor cannot move the conveyancing on to complete a sale, often causing long and unnecessary delays to the transaction.

Meanwhile, all Help to Buy properties in England will also be sold as freehold, again except in exceptional circumstances. Where a homeowner is sold a leasehold home incorrectly, they will be able to secure their freehold at no extra cost.

Responsibility to confront unfairness

Mr Brokenshire told the 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.”

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