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Government to Ban Leaseholds For New Build Houses

A ban on leaseholds for almost all new build houses is to come into effect as part of new Government measures to deliver a ‘fairer, more transparent system for homeowners’.

The Communities Secretary Sajid Javid has announced plans to cut out ‘unfair and abusive’ practices within the leasehold system. Javid is not only stopping the housebuilders money-spinning technique of selling more and more houses as leasehold, he is also encouraging buyers to report them for doing so.

In previous decades, leasehold has generally applied to flats with shared spaces, but developers have been increasingly selling houses on these terms also, allowing them to charge a ground rent and then sell these ground rent portfolios to investors that specialise in that sector.

However, mainstream media in the UK has been focusing on this issue for some time, with particular interest in some contracts that will allow the annual ground rent charge to double every 10 years, making them unsellable in 40-50 years’ time.

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