HOUSING secretary James Brokenshire is to launch a consultation today on proposals to reform the system of leaseholds to rid homeowners of the “unnecessary” burden of ground rents.
Under the proposals, the majority of newbuild houses would be sold as freehold and new leases would be capped at just £10. According to the Ministry of Housing, Communities & Local Government (MHCLG), on average leaseholders pay over £300 ground rent each year, with some paying as much as £700.
Also included are new measures to make it easier for leaseholders to get tenant associations formally recognised and protect consumer interests.
“The Government is committed to making the economy work for everyone by helping people with the cost of living,” said Brokenshire. “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.”
Leasehold generally apply to flats with shared spaces, but according to the ministry, a number of developers have been increasingly selling houses on these terms – placing further financial burdens on those looking to buy a house of their own through surcharges like ground rent.
This can also mean selling their home is more expensive and takes longer than selling a freehold property.
There were an estimated 4.2 million residential leasehold properties in England in 2015 to 2016, of which 2.9 million – or around two-thirds – were flats, according to MHCLG figures.