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15/10/2018

Brokenshire to cap new leases at £10

Words: Laura Edgar
Housing / Shutterstock_84968503

Housing secretary James Brokenshire has launched a consultation on the government’s plans for most new-build homes to be sold as freehold and for the ground rents on new leases to be capped at just £10.

It is hoped that the plans will bring an end to the “unjustified” selling of new houses as leasehold.

Leasehold generally applies to flats with shared spaces, but a number of developers, said the government, have been increasingly selling houses on these terms, which adds to the financial burden for people looking to buy a house of their own through surcharges like ground rent. On average leaseholders pay over £300 ground rent each year.

This can mean that selling a home is more expensive and can take longer than selling a freehold property.

The consultation also considers what the appropriate and fair exemptions are, such as shared ownership properties and community-led housing, to ensure that consumers’ best interests are at the heart of the property market.

Brokenshire said: “Unfair ground rents can turn a homeowner’s dream into a nightmare by hitting them in the back pocket, and making their property harder to sell.

“That’s why I’m taking concrete action to protect homeowners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds.”

Michael Voges, executive director of Associated Retirement Community Operators (ARCO), the trade association for operators of housing-with-care developments for older people, said changes are welcome to the leasehold system but reforming it is not the answer for the retirement community sector.

“Instead, new models of tenure are needed to address the complex issues of bringing together housing, support and care services on the same site. Therefore, we would like to see the government introduce sector-specific legislation that clearly spells out the rights and responsibilities of both operators and residents.

“Many countries with more advanced retirement community markets have already moved away from structures similar to leasehold. This allows legislation and regulation to be much more targeted and specific, leading to both greater consumer confidence and greater clarity for operators. It also avoids unintended consequences, such as the real danger that retirement community operators in the UK may stop developing bungalows as a result of a ban on leasehold houses.”

Wheeler launches working group on property

Housing minister Heather Wheeler has announced that a new working group, chaired by Lord Best, will consider how to raise standards across the property sector so that everyone – buyers, sellers, tenants, landlords and leaseholders – receives the best service.

At the moment, people can operate as a property agent without any qualifications or professional oversight and, the government says, while many take a professional approach and sign up to standards of practice through membership of a professional body, others do not.

The working group will consider the whole property agent sector to ensure that any new framework, including any professional qualifications requirements, a code of practice, and a proposed independent regulator, is consistent across letting, managing and estate agents.

Wheeler said: “For too long, many people have faced incurring fees and bad service from a number of property agents. People should have confidence when buying, selling or renting a home.

“Lord Best’s wealth of knowledge will provide a valuable insight and help us make necessary changes to ensure that consumers have confidence when buying, selling, letting or renting their home.”

Representatives of agents and consumers and independent experts will join Lord Best on the panel. The group has been instructed to report back to the government in summer 2019.

Image credit | Shutterstock

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