Plans are being drawn up by the Government to stop developers selling new-build houses with leases. As we reported in February 2017, thousands of owners of new build homes have found they are facing unexpected costs when buying the freehold.
According to a news story in the Daily Mail, ministers will outlaw the ‘feudal’ practices of builders who sell new builds with leases that force buyers to pay a yearly ground rent to the freeholder.
Not only do some of these fees drastically increase every decade, which cripples homeowners and makes the property almost impossible to sell on – but some new build owners find that the cost of the freehold is much more than they anticipated (as in the case of Katie Kendrick who had expected to pay around between £2,000 and £4,000 for the freehold on her new build home, only to find that the freehold had been sold on by the developer to an investment company – who were quoting her £13,300 for the freehold).
According to the Department for Communities and Local Government (DCLG), one in five private homes in England – four million in total – are leasehold, with 1.2 million of these being houses that have leases, including 167,000 detached homes.
A DCLG spokesman said: “It’s unacceptable that homebuyers are being exploited with unfair charges and unfavourable ground rent agreements. We will take action to tackle all unfair and unreasonable abuses of leasehold.”
Theresa May has also pledged to tackle the problem, saying: “I do not see why new homes should not be built and sold with the freehold interest at the point of sale.”