The leasehold reform and the value of face-to-face advice

John Phillips

August 1, 2017

John Phillips is group operations director of Just Mortgages and Spicerhaart

Like the vast majority of the industry, I too welcome the government’s proposals to ban the sale of new-build homes under leasehold. However, although figures show that around 100,000 homeowners are trapped in ‘unsellable’ properties, the government’s proposed plan only relates to future sales.

Despite this, during a recent consultation, the government seemed very keen to show that it has not forgotten about existing leaseholders who are affected by spiralling and ‘onerous’ ground rents. But in reality, there was very little detail about how this might actually work. Sajid Javid also admitted that there’s not yet any definite or concrete plans to encourage builders to take action in order to assist those who are already affected.

Therefore, a lot more needs to be done to help those with existing leases.

In the last few years, we’ve seen a significant increase in the number of houses being sold on leasehold terms for no good reason. In fact, I recently read that more than a quarter of the four million Brits who live in leasehold properties live in houses. This surprised me, as more often than not, leasehold agreements apply to flats. This I can just about understand, but why and how was this allowed to happen for houses and for such a long time? Those who bought these houses have been subject to escalating ground rents, and developers have used this as another income stream, often at the customer’s expense.

We’re clearly living in extraordinary times as we continue to experience political and economic change. As a result, human advice is more important than ever. Unlike robo advice, human advisers can advise their clients, alongside the conveyancer, on these impending changes and how they may be affected. An automated service is unable to provide this level of service.

To say that the leasehold reform is overdue is an understatement but I’m confident that these changes will help to create a much fairer marketplace. Like the rest of the industry, I also look forward to hearing what steps will be taken, particularly in terms of improving the situation for existing leaseholds. It’s evident that the government must go further to tackle this issue, although these changes are certainly a big step in the right direction.

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