Javid announces crackdown on leasehold ‘abuses’

25 Jul 17

The government is considering ending its Help to Buy equity loan scheme for new build leasehold properties as part of a crackdown on “unfair” practices.

Communities secretary Sajid Javid today set out plans for an eight-week consultation on leaseholds that opens the possibility of stopping government loans for leaseholds unless “reasonable” terms are met.

Proposed measures include a ban on new homes being sold as leasehold in England as well as restricting ground rents to as low as zero to protect homebuyers from, what Javid called “long-term financial abuse”.

Rules on the Help to Buy equity loan scheme would also be changed so it only supports the purchase of new builds constructed on “acceptable terms”.

Problems the government is seeking to tackle include expensive ground rents, freeholders charging high fees for permission to make minor changes to leasehold homes, and inflated prices for leaseholders purchasing leases.

Javid said: “It's clear that far too many new houses are being built and sold as leaseholds, exploiting homebuyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop.

“Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.”

According to the Department for Communities and Local Government, of the 4 million leasehold residential properties in England in 2014-15, 1.2 million were leasehold houses.

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