All new-build houses will be sold as freehold in a bold move to tackle unfair leasehold practices, and ground rents for new leases will be reduced to zero, the communities secretary has stated.
In a wide-ranging speech to the Chartered Institute of Housing conference in Manchester today, James Brokenshire MP confirmed plans to abolish the selling of new houses as leasehold properties. This will prevent future homeowners from being trapped in exploitative arrangements.
New rules will also be introduced to stop freeholders and managing agents taking as long as they want – and charging what they want – to provide leaseholders with the information they need to sell their home.
There will be a new time limit of 15 working days to provide information and a maximum fee of £200. This should make the home buying and selling process quicker, easier and cheaper.
Help to Buy
The secretary of state has also instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.
Where buyers are incorrectly sold a leasehold home – saddling them with a property that could ultimately prove difficult to sell – consumers will be able to get their freehold outright at no extra cost.
A further 18 property developers, managing agents and freeholders – including Crest Nicolson and Keepmoat Homes – have signed up to the government’s industry pledge.
This commits them to freeing existing leaseholders trapped in onerous deals where ground rents double every 10 or 15 years. This takes the total number of signatories to over 60.
Other proposals unveiled include making it easier for renters to transfer deposits directly between landlords when moving; extra funding for 19 new garden villages with the potential to deliver 73,554 homes; and new measures to speed up planning applications.
New Homes Ombudsman
A consultation has been launched on redress for purchasers of new build homes and the setting up of a New Homes Ombudsman to protect the rights of homebuyers and hold developers to account.
The consultation seeks views on the detail of the proposed legislation and runs until 22 August.
£2 billion affordable homes funding
The communities secretary has opened the bidding process for £2 billion in long term strategic partnerships to deliver additional affordable homes through housing associations with funding available until March 2029.
The government says these new bids will continue to build on the 430,000 affordable homes delivered since 2010.
Brokenshire said: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market. Last year we consulted on proposals including the leasehold house ban and ground rent reduction.
“Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.
“And we will legislate to ensure that in the future – save for the most exceptional circumstances – all new houses will be sold on a freehold basis.
“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows – helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.
“The government’s proposals have already had a fundamental impact on the housing market since they were unveiled, with the sale of leasehold houses falling from 11% to just 2% this year.”
By Joanne Atkin
Source: Mortgage Finance Gazette