Government unveils new build leasehold ban Government unveils new build leasehold ban
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  1. #1

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    Default Government unveils new build leasehold ban

    (Taken friom Mortgage Strategy)

    The Government has announced plans to ban the “unjust” practice of selling new build houses under expensive leasehold terms.

    Last November it emerged that some property developers had been selling new-build houses on a leasehold basis with very expensive ground rents.

    Some of the contracts saw ground rents double every 10 years.

    Today the Department for Communities and Local Government announced an eight-week consultation on plans to crack down on the practice.

    The DCLG says that, if left unchecked, consumers could be exposed to “unreasonable and long-term financial abuse”.

    The department also proposes to reduce or cap ground rents, possibly at zero.

    A statement from the DCLG says: “Ground rents are charged on all residential leasehold properties but evidence shows that they are becoming increasingly expensive.

    “Under Government plans they could be reduced so that they relate to real costs incurred, and are fair and transparent to the consumer.”

    The DCLG would also change the rules on Help to Buy Equity loans so that the scheme can only be used to support new build houses on “acceptable” terms.

    Other proposals include closing other loopholes to protect consumers, such as contract clauses leaving some leaseholders vulnerable to possession orders.

    Communities secretary Sajid Javid says: “It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop.

    “Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.”

    The DCLG says that the terms of some leases are becoming increasingly harsh.

    The department says it has seen examples of a family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060.

    It adds that another example saw a homeowner being charged £1,500 by the company to make a small alteration to their home.

    The DCLG has also seen case where a homeowner was told buying the lease would cost £2,000 but the bill came to £40,000.

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    Yeah - when I had a leasehold house it was like £50 quid a year or something

    But my mate bought a new build and it was £3k a year - he did buy it out - cost him like 6k but the whole practice is a joke.

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    Quote Originally Posted by original PM View Post
    Yeah - when I had a leasehold house it was like £50 quid a year or something

    But my mate bought a new build and it was £3k a year - he did buy it out - cost him like 6k but the whole practice is a joke.
    It's a medieval system and needs an overhaul. Its interesting to note that this is for houses only by the looks of it. The policy is a step in the right direction but does nothing to stop the exploitation by freeholders to those who live in flats when it comes to the cost of renewing a lease or increasing ground rents.

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    Quote Originally Posted by Martin@AS Financial View Post
    It's a medieval system and needs an overhaul. Its interesting to note that this is for houses only by the looks of it.
    Houses definitely shouldn't be leasehold as they sit on their own plot of land. I know some lenders are choosing not to lend to leasehold houses.

    Flats are more complicated due to the fact that things like the roof, stairs, life and grounds are shared amongst many properties and there must be some way of legally forcing everyone to pay for the upkeep.
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    Quote Originally Posted by SueEllen View Post
    Houses definitely shouldn't be leasehold as they sit on their own plot of land. I know some lenders are choosing not to lend to leasehold houses.

    Flats are more complicated due to the fact that things like the roof, stairs, life and grounds are shared amongst many properties and there must be some way of legally forcing everyone to pay for the upkeep.
    100% agree in that a service charge should be paid towards maintaining the common areas and also building a sinking fund for doing emergency repairs.

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    Quote Originally Posted by Martin@AS Financial View Post
    100% agree in that a service charge should be paid towards maintaining the common areas and also building a sinking fund for doing emergency repairs.
    There are loads of scams involving service charges e.g. choosing their mates insurance company and then whacking on a massive admin charge, demanding a massive service charge and pretending to do the work.

    Even when people get share of freehold the problems don't always go away.
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    Typical of these disgraceful house building companies, they really are up there with parking enforcement companies, ambulance chasing lawyers etc. Other practices they like to use to fleece buyers and maximise profit:

    1) Targeting local councils without a "Local Plan" for homebuilding, they know that they'll be allowed to build pretty much what they want as it will get through appeal if there's no plan in place.
    2) Govt/Planners in some cases set minumum room sizes as a condition for getting permission. Once obtained this will be quietly ignored.
    3) A new "finished" home with no carpets or turf in the garden? WTF?!
    4) Avoiding all that messy brownfield land in favour of nice easy countryside to build acres of their identikit homes on.
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    The consultation can be answered here - https://www.gov.uk/government/consul...asehold-market

    Yes you can submit it online.
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    Its ll the fault of the EU. After Brexit it will be fine.

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    House prices only ever go up. Everything else is irrelevant.
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