Monthly Archives: January 2018

Leasehold reforms announced

Sajid Javid has announced the results of the consultation on ‘Tackling Unfair Practices in the Leasehold Market’

The Communities Secretary has announced these new measures to cut down what he terms ‘unfair and abusive practices within the leasehold system,’ including a ban on leaseholds for almost all new build houses.

This comes as part of the Government’s desire to provide redress for those affected by the issues coming out of the ‘leasehold scandal.’

Changes will also be made so that ground rents will be restricted on new long leases – for both houses and flats.

The Government also says that it will make it make it cheaper and easier for existing leaseholders to buy-out their freehold – although how this will be brought into force is not clear.

These measures follow the recent consultation which has been much commented on and which received more than 6,500 responses.

There are estimated to be around 1.4M leasehold houses in total in England and Wales and hence the desire to be seen to ‘redress the balance’ and stamp out some poor practices on the part of developers involving leaseholds.

It has to be said that ready access to better quality advice might well have prevented some of these ills, – but with developers encouraging buyers to use ‘panel’ solicitors and people being unfamiliar with the potential issues with ‘sharp’ drafting – we have the current situation, which has led to the have led to the government’s approach to solving what has become a consumer issue.

This is very welcome news for buyers of new properties in particular, but the promised changes are stated to have some wider objectives, which may have benefits for other leaseholders.

A short summary of the proposals appears below:

• Legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership;

• Making certain that ground rents on new long leases – for both houses and flats – are set at zero;

• Working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper;

• Providing leaseholders with clear support on the various routes to redress available to them;

• A wider internal review of the support and advice to leaseholders to make sure it is fit for purpose in this new legislative and regulatory environment; and

• Making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges.

Exactly how these will Be brought into force remains to be seen, but 2018 will be a busy year for leasehold and leasehold reforms.