Tuesday, July 25, 2017
Why Wales should follow England in leaseholds on new-build houses
Communities Secretary, Sajid Javid is absolutely right, the increasing use of leasehold sales on new build houses is exploitative and positively feudal.
As the BBC report, the UK Government is proposing to outlaw leaseholds on new-build houses, while ground rents could be dramatically reduced, under government plans which are subject to public consultation.
Modern day leases on houses, often contain provisions that lead to ground rents doubling every decade, crippling home owners and in some cases making a property impossible to sell:
The Department for Communities and Local Government (DCLG) said the terms of some leases "were becoming increasingly onerous".
It cited examples of:
The DCLG said its proposals aimed to make future leases fairer by reducing ground rents so they "relate to real costs incurred".
About 21% of private housing in England is owned by leaseholders, with 30% of those properties houses rather than flats, according to figures from the Department for Communities and Local Government.
Like Rent Charges, leaseholds are an anachronism, a legacy of more feudal times when big estate owners and industrialists built homes for their workers, whilst retaining ownership of the freehold.
Many leases were granted for 99 year terms on houses I the latter part of the 19th Century, leading to householders in the 1960s suddenly facing massive bills to remain in their own homes. The outcry led to the introduction of the 1967 Leasehold Reform Act.
Now, we are being faced with a new spate of leasehold properties designed to maximise the return for the developer. In my view, and that of the Communities Secretary, these leases are exploitative.
I do not know the extent that the practice in the north-west of England in particular has infiltrated Wales, but now that the UK Government has taken the initiative, Welsh Ministers need to follow suit, carry out their own research and ban leases on new-build houses here as well.
If they do not do so then they will be letting down many home buyers and leaving them open to exploitation.
As the BBC report, the UK Government is proposing to outlaw leaseholds on new-build houses, while ground rents could be dramatically reduced, under government plans which are subject to public consultation.
Modern day leases on houses, often contain provisions that lead to ground rents doubling every decade, crippling home owners and in some cases making a property impossible to sell:
The Department for Communities and Local Government (DCLG) said the terms of some leases "were becoming increasingly onerous".
It cited examples of:
- A homeowner being charged £1,500 by the freeholding company to make a small change to their family home
- A family home which is now impossible to sell because the ground rent is expected to hit £10,000 a year by 2060
- A homeowner who was told buying the lease would cost £2,000 but the bill came to £40,000.
The DCLG said its proposals aimed to make future leases fairer by reducing ground rents so they "relate to real costs incurred".
About 21% of private housing in England is owned by leaseholders, with 30% of those properties houses rather than flats, according to figures from the Department for Communities and Local Government.
Like Rent Charges, leaseholds are an anachronism, a legacy of more feudal times when big estate owners and industrialists built homes for their workers, whilst retaining ownership of the freehold.
Many leases were granted for 99 year terms on houses I the latter part of the 19th Century, leading to householders in the 1960s suddenly facing massive bills to remain in their own homes. The outcry led to the introduction of the 1967 Leasehold Reform Act.
Now, we are being faced with a new spate of leasehold properties designed to maximise the return for the developer. In my view, and that of the Communities Secretary, these leases are exploitative.
I do not know the extent that the practice in the north-west of England in particular has infiltrated Wales, but now that the UK Government has taken the initiative, Welsh Ministers need to follow suit, carry out their own research and ban leases on new-build houses here as well.
If they do not do so then they will be letting down many home buyers and leaving them open to exploitation.
