Following media exposure of exorbitant ground rents being imposed by some home builders, the government announced new measures on 21 December 2017 aimed at stopping unfair practices within the residential leasehold market in England.
The measures include:
- The introduction of legislation to ban new long leases from being granted on houses, whether new build or existing freehold houses, save for some exceptions such as shared ownership leases or where a developer only holds a leasehold interest.
- Ensuring that ground rents on new long leases, for both houses and flats, are set to zero (save in the case of shared ownership leases).
- The extension of compensation schemes offered by developers to all existing leaseholders with onerous ground rents, including second-hand buyers.
- Working to support existing leaseholders with the aim of making the process of purchasing a freehold or extending a lease easier, faster and cheaper. The government will consider introducing a right of first refusal for houses and a minimum lease term for new long leases of flats.
- Action to address the loophole created by the fact that long leaseholders with ground rents exceeding £250 per annum, or £1,000 per annum in London, may be assured tenants and to ensure that long leaseholders are not therefore subject to unfair possession orders.
- Making sure freeholders who are liable to pay estate charges have equivalent rights to leaseholders to challenge unfair charges.
It is clear that residential leasehold is a government priority and the spotlight is currently directed at it from all angles.
For further information on the Residential Leasehold market or any other Property law matter, please contact Lina Rodriguez on 02034901475 or via email to email@example.com.