Developers sign government-backed pledge to crack down on ‘toxic leasehold deals’
A new industry pledge to stop leaseholders being trapped in unfair and costly deals has been announced by Communities Secretary James Brokenshire.
The MP said that over 40 leading property developers and freeholders, including Taylor Wimpey and Barratt Homes, have already signed the government-backed pledge.
It commits them to getting rid of the much-maligned ‘doubling clauses’ that can result in ground rents rocketing over a short period of time.
The Communities Secretary James Brokenshire, said: “The new industry pledge – signed by leading freeholders and property developers – will further support existing and future leaseholders by protecting them from onerous fees.
“It’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge, and I want to see others who have not yet signed up do the right thing.”
End to high fees
The Government also plans to close the legal loopholes that force leaseholders to pay unjustified fees when they take their freeholders to court over unfair service charges. It will hold a consultation with industry on whether these changes should apply to existing leases too.
As it stands, leaseholders who wish to take their landlords to court to challenge exorbitant fees or unfair hikes in annual charges also run the risk of being forced to pay their landlord’s legal fees.
Housing Minister Heather Wheeler MP said: “It is unacceptable that the burden of legal fees – potentially running into tens of thousands of pounds – is preventing people from seeking justice.
“The plans announced today will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone.”
Matthew Jupp, principal of mortgages policy at UK Finance, added: “Mortgage lenders share the government’s concern with poor practices in the leasehold market, including the rapid escalation of ground rents, and many have already taken action to help prevent unfair leasehold terms for new buyers.
“UK Finance will continue to work with the government, regulators and industry and to ensure the wider leasehold market works well for all.”