No more leasehold houses will be sold in England and Wales, the government said last week. Developers will no longer be able to hold homeowners to ransom by selling their freeholds and doubling ground rents and freeholders will be able to challenge estate management fees. Legislation willbe brought in to ban long leases on houses and ground rents will be kept to a minimum for both new build houses and flats.
This is welcome news for new homebuyers but what is being done about existing leaseholders who are already trapped by escalating charges?
There are an estimated 4.3 million leasehold homes in England and 1.4 million of them are houses. Campaigning group the Leasehold Knowledge Partnership believes that this equates to 100,000 families trapped in houses that are now impossible to sell because their contracts are so unfair. According to the Mail Online this week, ?more than half of new houses were sold on 'unfair' leasehold terms in some towns last year? despite then Communities Secretary Sajid Javid pledging a ban in 2017. This is backed up by figures from the House of Commons which reveal that a total of 3,394 new leasehold houses were sold across England last year.
Communities Secretary James Brokenshire has now promised new laws to take the ban forward, saying ?We will legislate to ensure that in the future ? unless there are exceptional circumstances ? all new houses will be sold on a freehold basis, with ground rents in future leases reduced to zero?.
So far so good. But the problem now, as the Leasehold Knowledge Partnership rightly points out, is that government is in danger of creating a two-tier market in the leasehold sector. Clearly the ban ? when it comes - is a step in the right direction for homeowners. But two issues remain. Legislation takes time, so what happens to those buying homes now? And what is the outlook for existing homeowners? The MHCLG now needs to apply itself to the issues being faced by thousands of families around the country and find a way to bring genuine fairness to the sector.