The end of leasehold for new-build homes
Following overwhelming response from the public, the Government confirmed the ban of the sale of new-build leasehold homes in July last year, requiring developers to re-evaluate leasehold agreements.
The future for leasehold
The number of leasehold properties has increased significantly in the UK in recent years, seen mostly in cities with the surge in apartment building. Statistically, one in five of all properties are leasehold, with the number of leasehold houses equating to 1.4 million. And while the abolishment of ground rent fees for new build properties is a winning result for the public and will no doubt boost sales of new build homes, there is concern that existing leaseholders will find it hard to sell their properties with ground rents still applicable to their properties. That said, the Government, alongside the Law Commission are looking at ways to support existing leaseholders, to help make it easier and cheaper to buy a freehold or extend a lease.
There will remain situations where leasehold will still apply, such as where there are shared services or houses are built on land with certain restrictions.
Leasehold Reform Bill 2017-19
The Government’s Leasehold Reform Bill has been drafted to deliver a straightforward, fair plan to regulate the purchase of freehold by leaseholders. The second reading debate of the bill is expected to take place on Friday 2 February 2018. At its core is the introduction of a system to establish the maximum charge for freehold, to make provision for the award of legal costs in leasehold property tribunal cases and to establish a compensation scheme for cases where misleading information has led to certain leasehold agreements. From the Government’s point of view, the need for action forms part of their strategy to help those families struggling with the rising cost of living.
Developer action
It’s still early days for developers to commit to a course of action, many including Redrow Homes are still in active consultation with the Government over leasehold and new build homes. Taylor Wimpey meanwhile, is the first to set aside a sum to assist affected leasehold buyers. But it’s expected from this point on that mainstream house builders will continue with their development plans and retain their promise to build more new homes to meet demand. What will change is greater clarity for consumers, to ensure transparency and fairness moving forward.
Advice for consumers
The current advice for those looking to purchase a new home that may be sold as leasehold is to make sure the lease is checked carefully. And to avoid uncertainty or being caught out with anything, it might also be worthwhile getting a solicitor for further help. For those who have purchased a new build leasehold property, it’s not yet known what the outcome will be for any mis-sold leaseholds, but the positive to take away is, the matter is currently being debated with a view to redress.
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