New homes face leasehold ban under Government proposals
The government announced a consultation this week on its proposal to ban leaseholds on new build properties.
The move follows growing concern over onerous leaseholds and escalating ground rents, some of which double every five or 10 years, leaving homeowners out of pocket.
The consultation paper, called ‘Tackling unfair practices in the leasehold market’ only covers England, and the industry has two months to respond to its proposals. The document looks at whether or not the government should ban the sale of new-build leasehold houses, limit ground rents and protect leaseholders from repossession.
The Secretary of State for Communities and Local Government, Sajid Javid, said: “As a government committed to building a fairer society, I don’t see how we can look the other way while these practically feudal practices persist.”
Nationwide Building Society welcomed the move, and pointed out it was the first major lender to impose fairer and more transparent lending conditions on these homes.
Robert Stevens, head of property risk, data and strategy at Nationwide, said: “We are pleased that the Government have recognised our efforts to push to achieve fairer ground rents as part of the consultation.
Nationwide took a proactive, leading position on this issue to challenge what we believe to be poor practice in the new build market back in May. Therefore we will not lend on leasehold new builds with terms of less than 125 years for flats and 250 years for houses. Moreover, we will not lend on new build properties with unreasonable ground rents – such as those doubling every five, 10 or 15 years.
“The Government’s consultation is considering additional changes that would look to address unfair practices and we look forward to exploring these proposals in due course. We hope that this leads to better outcomes for those buying new build properties by creating a fairer marketplace.”