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Holbrook and Co - Specialists in helping people buy, sell and mortgage property

WHAT’S NEXT FOR NEW-BUILD LEASEHOLD BUYERS?

In July, Mark Potter of Holbrook & Co, Licensed Conveyancers (Specialist Property Lawyers) of Warrington, welcomed the government launch of an eight-week consultation into ‘unfair leasehold practices’ – with a particular focus on the sale of new-build homes as leaseholds and spiralling ground rent clauses.
Under the government’s proposals, leasehold new-build houses would be banned – except for in ‘exceptional circumstances’. In addition, ground rents on these properties would be reduced to zero, or a figure that relates to actual costs incurred by the freeholder. The government is also consulting on how it could amend the rules of the popular Help to Buy equity loan scheme, to ensure it’s only available on houses with ‘acceptable terms’.
The consultation comes after a number of buyers reported issues with new-build properties sold as leaseholds. Many houses were sold with a ‘doubling ground rent clause’ – meaning the ground rent payable on the property doubled every ten years. In one case highlighted by the government in a statement, the ground rent was due to increase to £10,000 by 2060, effectively making the home impossible to sell. Some owners also faced unreasonable restrictions on what they were able to do with their properties – for example, being charged high fees for making minor alterations to their home.
The survey includes questions on the following topics:
• Prohibiting the sale of new-build leasehold houses
• Changes to the Help to Buy scheme in relation to leasehold houses
• Limiting both the starting cost and any increases in ground rents on long-term leases
• Updating the Housing Act so long leases with annual ground rents of more than £1,000 (London) or £250 (outside London) cannot be Assured Tenancies
• Providing freeholders with the same rights as leaseholders to challenge the ‘reasonableness’ of service charges in tribunals
The next step is for the government to analyse the responses to its consultation – but as it stands there’s no concrete information on how long this could take.

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Palmyra Square South
Warrington, Cheshire
WA1 1BL 01925 444422
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