Ministers have announced ‘radical’ new proposals to cut out what they call unfair abuses of leasehold arrangements.
Communities secretary Sajid Javid has set out plans to ban almost all new build houses being sold as leasehold as well as restricting ground rents to 'as low as zero'.
The Government said leasehold arrangements can often expose homebuyers to ‘unreasonable and long-term financial abuse’.
Leasehold generally applies to flats with shared spaces, but developers have been increasingly selling houses on these terms, the Government said.
Mr 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.’
Other measures, which relate to England only and are now subject to an 8-week consultation, include:
- closing legal loopholes to protect consumers – such as leaving some leaseholders vulnerable to possession orders; and
- changing the rules on Help to Buy Equity loans so that the scheme can only be used to support new build houses on acceptable terms.
The proposed prohibition on future houses being sold as leasehold will apply to all houses apart from a few exceptional circumstances where leasehold is still needed – such as houses that have shared services.
Government statistics estimate there were 4 million residential leasehold dwellings in England in the private sector in 2014/15 and of these 1.2 million were leasehold houses.
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