Recently announced proposals to tackle “unfair and abusive” practices in Britain’s leasehold system are set to have significant implications for the nation’s property market.
The headline measure outlined by the Ministry of Housing, Communities and Local Government was to impose a near total ban on leaseholds for new-build properties.
Other proposals include taking action to ensure that ground rents on long-term leases will be set to zero for both houses and flats and a new system which would make it easier for present leaseholders to buy-out their freehold.
Secretary of State Sajid Javid will be tasked with steering the changes through Parliament.
The Government is understood to be aware that there is a growing public appetite for change and indeed a recent consultation suggested that respondents were “overwhelmingly” in favour of clamping down on exploitative practices; with this in mind, it is likely no coincidence that Mr Javid’s department was recently rebranded to put greater emphasis on its responsibilities for the housing market.
The issue has become all the more urgent given that there are now 1.4million leasehold houses in England.
Mr Javid said: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.
“It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this government is now putting in place will help create a system that actually works for consumers.”
The Government has been warned, however, that in the months ahead it will need to ensure that any reforms do not create a “two-tier” housing market, in which new-build freehold homes are considerably more attractive than older leasehold properties.
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