by Charles Oliver BSc MSc FRICS FAAV MEWI FCIArb, Associate Director, Associate Director
Concerns continue over new build houses being sold as leasehold.
The problem stems from onerous lease clauses that double the ground rent as often as every ten years. Consequently, this could make future selling or mortgaging impossible.
In many cases, buyers say they were also encouraged to use developers' recommendations for their conveyancing and mortgage broker.
Until recently, new houses have been sold freehold and some commentators have described this new departure as a profit boosting exercise that should be outlawed.
One developer, Taylor Wimpey, has already set aside £130m to compensate those affected by 'toxic' leases – often sold on to anonymous third or fourth parties whilst the ink is still wet on the contract.
The government has now been galvanised into action and proposes to outlaw 'unjust leases' on new houses.
Sajid Javid the Communities and Local Government Minister said "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 government will consult with the aim to make leases fairer by reducing ground rents to zero in order for them to "relate to real costs incurred". Plans include closing legal loopholes to protect leaseholders left vulnerable to possession orders.