New builds to be sold as freeholds

Michael Lloyd

June 27, 2019

All new build houses will be sold as freehold to tackle unfair leasehold practices and prevent future homeowners from being trapped in exploitative arrangements, the Communities Secretary James Brokenshire has said.

The Secretary of State for Housing, Communities and Local Government confirmed plans to abolish the selling of new houses as leasehold properties and reduce ground rents for new leases to zero.

Speaking at the Chartered Institute of Housing conference in Manchester, he said this would put cash back into the pockets of future homeowners.

James Brokenshire MP (pictured) told the conference: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market. Last year we consulted on proposals including the leasehold house ban and ground rent reduction.

“Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.

“And we will legislate to ensure that in the future – save for the most exceptional circumstances – all new house will be sold on a freehold basis.

“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows – helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.”

Mark Hayward, chief executive, NAEA Propertymark, added: “We welcome the announcement that all new-build houses are to be sold as freehold.

“These future practices are a huge step in the right direction towards fixing Britain’s broken housing market. However, we need to sought a robust solution for all those affected, as the issue remains at hand that existing leaseholders are still trapped in properties they can’t sell or remortgage which has led to three in five (62%) feeling like they were mis-sold and we cannot leave them behind.”

Ministers will introduce a time limit of 15 working days and a maximum fee of £200 to make the home buying process quicker, easier and cheaper.

Brokenshire has also instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.

And where buyers are incorrectly sold a leasehold home – saddling them with a property that could ultimately prove difficult to sell – consumers will be able to get their freehold outright at no extra cost.

Other proposals introduced include: making it easier for renters to transfer deposits directly between landlords when moving; extra funding for 19 new garden villages; and new measures to speed up planning applications.

Councils will be able to approve planning applications more quickly to remove bureaucracy from the system. The planning green paper will be published later this year.

Over 60 property developers, managing agents and freeholders have signed up to the government’s industry pledge, committing them to freeing existing leaseholders trapped in onerous deals where ground rents double every 10 or 15 years.

The government said a New Homes Ombudsman will protect the rights of homebuyers and hold developers to account.

Today ministers have launched a consultation on redress for purchasers of new build homes and the New Homes Ombudsman. This seeks views on the detail of the proposed legislation and how a New Homes Ombudsman can be delivered and will run until August 22.

They are also exploring the options to appoint a New Homes Ombudsman in shadow form – working closely with industry, consumer groups and government to ensure improvements and standards are delivered quickly and help shape the future scheme.

The Communities Secretary opened the bidding process for £2bn in long term strategic partnerships to deliver additional affordable homes, with funding available until March 2029.

This marks the first time any government has invested such long-term funding in new affordable homes through housing associations, supporting the development of more ambitious long-term plans to build the homes this country needs.

These new bids will continue to build on the over 430,000 affordable homes delivered since 2010.

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