‘Unscrupulous’ leasehold practices outlawed with new-builds sold as freehold

“Unfair” leasehold practices are to be outlawed by the Government in proposed major reform of the sector.

Announcing measures to ensure the vast majority of new-build properties are now sold as freehold, Communities Secretary James Brokenshire said “unscrupulous” practices cost homeowners hundreds of pounds every year.

There are around 4.2 million leasehold properties in England, the majority of which are flats. However, in recent years developers have been selling new-build homes as leasehold. Often the leases are sold on to property management companies who can impose onerous ground rents and management charges on the leaseholder.

The new measures are designed to outlaw that practice while also capping ground rents at the nominal sum of £10 per year.

Enforce collective rights

Leaseholders will also be given support to form tenant associations legally to enforce their collective rights, while changes will also be made to ensure those who want to buy out their leasehold can do so faster and more cheaply.

A consultation has now been launched on the proposals.

Mr Brokenshire said: “The government is committed to making the economy work for everyone by helping people with the cost of living.

“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.”