Ground rents on new leases could be limited to lb10 a year under new proposals.
The plan forms a part of a six-week consultation launching today, marking the government’s latest move as it looks to remedy the ongoing leasehold scandal.
But as the proposals could be good news for people who buy leasehold properties in the future, existing leaseholders held in unsellable properties haven't yet get any clarity on whether they could be entitled to redress.
What may be the government proposing to do?
The government has today launched its latest consultation into leasehold reform.
The most significant proposal put forward involves capping ground rents – which frequently run to countless pounds annually – at a nominal fee of lb10 on new leases.
Housing minister James Brokenshire says: ‘Unfair ground rents can turn a homeowner’s dream into a nightmare by hitting them in the back pocket, and making their home harder to market.’
The other proposals include:
Leasehold: the basics
When you buy a house, it'll either be leasehold or freehold. If you buy a leasehold home, you own the home itself but not the land it stands on.
This means you’ll have to pay an annual fee known as a ground rent to the freeholder, in addition to a service charge for the maintenance of any common areas.
Traditionally, leasehold homes have more often than not been flats, though previously decade many developers have started selling houses as leasehold, too. The government is planning to ban this in almost all cases.
Leasehold reforms: what’s new?
With the exception of the lb10 ground rent announcement, the proposals reiterate those made by the government if this announced its first leasehold consultation in July 2022.
That consultation received 6,000 responses, which resulted in the federal government saying it would offer ‘clear support’ for leaseholders with onerous ground rent clauses last Christmas.
Since then, what the law states Commission has released a 568-page consultation paper into leasehold enfranchisement for existing homeowners.
Its proposals included giving leaseholders additional rights to buy or extend their lease, and taking out the requirement for these to have owned their home not less than two years before doing so. The proposals are actually part of another consultation which runs until 20 November.
The Law Commission’s report was condemned as ‘window dressing’ through the National Leasehold Campaign, a Facebook group of frustrated leasehold homeowners which boasts over 12,000 members.
Issues with leasehold houses
These are the biggest issues many leaseholders are presently facing:
Which? research into the leasehold scandal
Earlier this year, we published the most comprehensive research of its kind in to the leasehold scandal, covering everything from ground rent doubling clauses to punitive permission fees.
As part of this project, we spoke to almost 200 leaseholders. These homeowners raised complaints about houses built by 19 different housebuilders, including seven of the 10 biggest developers in the united kingdom.
You can find out more within our full investigation: ‘To have in order to leasehold? Inside the scandal rocking the new homes industry‘.
Which? has also submitted an answer towards the HCLG Committee’s call for evidence in to the progress of the government’s leasehold reforms.
Ground rent doubling clauses: an instance study
In June, Which? visited Andrea Millward, a leasehold homeowner located in Prescot, Merseyside.
Andrea’s lease has a ground rent doubling clause, meaning the lb295 annually she pays now will reach lb9,440 in 50 years.
Watch the recording below for Andrea’s story.