Gonvernment Consulting on How to Tackle Unfair Leasehold Practices

The Government has issued a consultation paper to the experts in the housing field labelled ‘Tackling unfair practises in leasehold’. This comes as no surprise […]

The Government has issued a consultation paper to the experts in the housing field labelled ‘Tackling unfair practises in leasehold’. This comes as no surprise to many as the recent housing white paper published outlined the governments plans to reform leasehold due to the clauses in contracts leaving leaseholders  facing increasing and onerous payments which left some properties almost unsellable.

The Government is now taking consultation on many areas where reform may be instigated, bringing forward many possibilities which include; prohibiting the sale of new build leasehold houses, restricting ground rents to a peppercorn, alterations to the Help to Buy scheme and giving freeholders on private estates the right to challenge the reasonableness of service charges under the First-tier Tribunal.

Limiting Ground Rents to a peppercorn would help eradicate the financial difficulties that many leaseholders are now facing due to once affordable ground rents seeing increases on their review dates which has seen some have the potential to rise into the tens of thousands of pounds per year. This has been seen as somewhat of a ‘scandal’ in the housing market as these clauses were largely looked over at the point of sale and have left many houses unsellable as 10 years worth of ground rent may be equivalent or even more than the cost of buying the home. A ‘peppercorn’ is a nominal value which maintains the existence of the Ground Rent but ultimately means it has no value and more often than not will not be demanded.

Communities Secretary, Sajid Javid said:

“It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop.

Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.”

It seems that the wheels are now in motion for radical reform of the Leasehold Housing Market and changes will undoubtedly be implemented in the near future, for the greater good of the consumer.