Government Plans To Ban All New Houses Being Sold As Leasehold

The Ministry of Housing, Communities and Local Government (MHCLG) have confirmed plans to abolish the selling of new houses as leasehold properties and reduce ground rents on new leases to £0, in an attempt to tackle unfair leasehold practices and prevent future home-owners from being trapped in properties they can’t sell.

In their press release last Thursday, they confirmed the following plans:

  • Ground rents on new leases to be reduced to £0.
  • All new houses to be sold on a freehold basis, unless there are exceptional circumstances.
  • Immediate action to ban Help to Buy being used to support leasehold houses – The Secretary of State has instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses.

The ministry have also planned to introduce a new time limit of 15 working days and a maximum fee of £200 for freeholders and managing agents to provide leaseholders with vital information they need to sell their home.

Where buyers are incorrectly sold a leasehold home they will be given the chance to get their freehold outright at no extra cost.

James Brokenshire MP, the Communities Secretary, said:

“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows”.

This announcement comes after last year’s consultation on leasehold reform and the recent investigation by the CMA into the leasehold system. Whilst this is a huge step forwards in tackling problems for future homeowners, the Government did not announce any plans to tackle these issues for owners of existing leasehold properties.

How Can Nelsons Help?Ban On New Houses Being Sold As Leasehold

Daniel Brumpton heads Nelsons’ Professional Negligence team and is currently helping many leaseholders investigate claims arising out of escalating ground rent clauses.

If you are concerned about the ground rent provisions in your long leasehold, please call Daniel or another member of our expert team in Derby, Leicester and Nottingham on 0800 024 1976 or contact us via our online form.