LKP would like to acknowledge the considerable role that has has been played by the political officials in helping bring about these changes, in particular Nick King and Louisa Darian.
The embargoed statement, which was not sent to LKP by DCLG civil servants, will be published at 00.01 hours on December 21.
The timing is obviously intended to dominate the agenda of the backbench debate on leasehold tomorrow.
Sir Peter Bottomley said: “The APPG will be stating to the DCLG that they have to co-operate fully and constantly with LKP who provide the most positive advice on the sector and who actively campaign for disadvantaged leaseholders.
“It beggars belief that they were left off the embargoed statement.
“The APPG thanks LKP and its trustees for their efforts. With them, change is coming; without them, neither parliament nor government would have moved.”
Sajid Javid promises to liberate leaseholders from ‘feudal practices’
Leaseholders are to be freed from “feudal practices” in the property market, according to the government minister responsible for housing, with new rules to make extending a lease or purchasing a freehold “much easier, faster and cheaper”.
Government announces ban on new leasehold houses in crackdown on ‘feudal’ practices
The Government will ban leaseholds for almost all new build houses in a crackdown on “feudal” practices. It is also set to ensure that ground rents on new long leases in England are set to zero, for both houses and flats, as well as making it easier and cheaper for leaseholders to buy out their freehold.
Crackdown on unfair leases kills off ground rents on new‑build flats
Ground rents will be outlawed on all newly built flats as the government went further than expected yesterday in a crackdown on unfair leasehold practices.
UK bans sale of new homes on leasehold basis
Selling new homes on a leasehold basis will be banned on Thursday and new ground rents will be set to zero in a bid to end “feudal practices” in Britain’s construction industry.
PRESS NOTICE – EMBARGOED UNTIL 00:01 THURSDAY 21 DECEMBER
CRACKDOWN ON UNFAIR LEASEHOLD PRACTICES
Communities Secretary Sajid Javid has announced new measures to cut out unfair and abusive practices within the leasehold system, including a ban on leaseholds for almost all new build houses.
This comes as part of Government action to deliver a fairer, more transparent system for homeowners to help fix the broken housing market and build a Britain fit for the future.
Changes will also be made so that ground rents on new long leases – for both houses and flats – are set to zero.
The Government will also make it cheaper and easier for existing leaseholders to buy-out their freehold and there will be better information available about redress for those consumers who face the most onerous terms.
These measures follow a recent consultation where there was an overwhelming response in favour of Government plans to tackle the unfair practices in the leasehold sector.
With 1.4 million leasehold houses across England and the number of leasehold sales rapidly growing, the Government is taking crucial action to make the leasehold market fairer.
Leasehold generally applies to flats with shared spaces, making multiple ownership more straightforward, but developers have been increasingly selling houses on these terms – adding further costs to over-stretched house buyers.
Communities Secretary, Sajid Javid said:
“It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.
“It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this Government is now putting in place will help create a system that actually works for consumers.”
Measures to be introduced include:
• Legislating to prevent the sale of new build leasehold houses except where necessary such as shared ownership;
• Making certain that ground rents on new long leases – for both houses and flats – are set at zero;
• Working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper;
• Providing leaseholders with clear support on the various routes to redress available to them;
• A wider internal review of the support and advice to leaseholders to make sure it is fit for purpose in this new legislative and regulatory environment; and
• Making sure freeholders have equivalent rights to leaseholders to challenge unfair service charges.
These latest measures follow the Government setting out plans in the Housing White Paper to fix the broken housing market, including making sure councils release more land for housing, building the right homes in the right places and improving affordability and protections for renters and home purchasers.
ENDS
Background
• These measures relate to England only.
• Over 6,000 responses were submitted to the recent government consultation on leasehold practices. The vast majority of responses expressed their concerns about the buying experience and living in a leasehold property. This highlights how the current system is clearly not working in the best interest of those living in or purchasing a leasehold home.
• The proposed prohibiting of future houses being sold as leasehold will apply to all houses apart from a few exceptional circumstances where leasehold is still needed – such as houses that have shared services or built on land with specific restrictions.
• We will also be continuing to discuss the case for limited exemptions with industry.
• Communities Secretary will be writing to all developers to strongly discourage the use of Help to Buy Equity loans for the purchase of leasehold houses in advance of legislation and to ask those who have customers with onerous ground rent terms to provide necessary redress.
• DCLG statistics estimate there were 4.2 million residential leasehold dwellings in England in the private sector in 2015/16 and of these 1.4 million were leasehold houses. This was a rise on the previous year when in 2014/15, there were 1.2 million leasehold houses.
Related posts:
Government to ban leasehold houses and set ground rents ‘as low as’ zero
Sajid Javid pledges Help To Buy clampdown on ‘feudal’ leasehold terms
Housebuilders shares crash over ground rents, with McCarthy and Stone down 10%
Has Brokenshire trashed Sajid Javid’s reforms of leasehold?
Daily Telegraph reports the new-build leasehold houses ban
Will Heysmoor Heights leaseholders lose their homes to anonymous offshore freeholder if they cannot pay Grenfell bills?
This reads effectively as the same announcement made in the summer?
Or am I missing something?
Javid has not mentioned anything about abolishing extortionate service charge demands from unscrupulous Managing Agents.
I fear that the income lost on ground rents will be picked up by increased service charges to leaseholders, so no winners really unless there is an RIght to Manage or Residents Management Company run by the leaseholders/owners of property.
Still an awful lot of work that the Governement have to do.
Slavery is an intolerable injustice.
This govt will take historic steps to address this injustice by ensuring that
1. No new slaves may be taken into captivity.
2. Existing slave owners’ rights to appeal against being overcharged for keeping slaves
3. Consultations will begin on providing support to ex-slaves in future
etc.
but not, of course, doing anything for the millions of people living in leasehold flats whose freeholds are in the hands of offshore companies controlled by LARGE DONORS TO THE CONSERVATIVE PARTY.
A country that works for everyone or one that works for the likes of Vincent Tchenguiz?
It seems that the Conservatives will do ANYTHING but what they OUGHT to do. So now we have to wait years for the Law Commission. It’s the transition period for landlords, ladies and gentlemen. Not a transition to an end state but to new loopholes, of course.
I think leasehold law is extremely flawed but you sound absolutely mad. Leasehold is a serious inconvenience but it is in no way comparable to actual slavery.
The devil is in the detail and I see that there will be exemptions to allow new leasehold houses with “shared services”.
What means ‘shared services’? Street lighting? Bin collection? Gardening? Begins to sound a lot like Christmas for developers? I would have thought it would not be hard for them to always add just a few shared services to almost every new development? Maybe a duck pond or two?
I know I can be criticised for looking down the horse’s mouth, but leasehold has survived largely untouched for a very long time despite a lot of ‘reform’.
Looks like it will survive a lot longer in England.
And yes, no mention of regulating managing agents, rogue or otherwise.
Don’t lose sleep on awaiting any Law Commission recommendations becoming law.
Future ground rent set to zero but exisitng ground rent… meh… screw those guys.
I suppose any step in the right direction is better than nothing!
Well, there’s a potential bit of hope for some in The Guardian which reports
Mr Tchenguiz and co. better start looking to unwind their portfolios if this is true, and if the govt survives long enough.
Thanks to all at LKP and Louie Burns & his team and all our lovely National Leasehold Campaign members. This is a step forwards. We now need to get more detail on what that means for those of us trapped in this mess and we need swift action from the Law Commission. The answer isn’t difficult – just read Justin Madders’ private members bill.
Thank you LKP and Patrons and 128 MPs members of the APPG .
At today’s Backbench meeting, please ask for more changes and faster implementation including :
1. Abolish forfeiture of lease
2. Abolish 2 years waiting period for making statutory lease extension.
3. Abolish Marriage values in statutory lease extension below 80 years.
4. Introduce collective leasehold enfranchisement at 7.5 times first year ground rent and contributions collected via the service charge account.
5. Introduce a ban of sale of freehold .title to non-long leaseholders.
6. Introduce compulsory refund of insurance commissions charged by freehold companies .
7. Introduce compulsory separate bank accounts for any estates with 10 or more units.
This is a major step forward and thanks are due to all at LKP, and to Justin Madders, Sir Peter Bottomley, and Jim Fitzpatrick, who should also be joined by Gavin Barwell and now Sajid Javid.
As contributors to this site will know, I am primarily concerned with existing flat leaseholds and I am greatly encouraged by the statement that the Communities Secretary will be working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper.
The Government will be making it easier and cheaper for existing Leaseholders to buy out their Freeholds.
Surely now is the time for TW and others to put this process in motion, and enable all their leasehold customers to buy them back at the prices they intimated at the time of purchase. Usually around £5000 max.
It would put many thousands of leaseholders out of their misery, and even be beneficial to the Developers as eventually Government guidelines could mean they have to sell for even less.
Just one thing though it is the Developers like TW who should be organising and financing these transactions, as it was them who started all this in the first place.
Do not leave it to the even more dodgy Finance Companies who many of the Freeholds have been sold on to.
Taylor Wimpey has put aside £130,000,000 for the leasehold scandal.
To put that amount into context, that is roughly the same amount of Jeff Fairburn’s (CEO Persimmon) annual bonus.
This is a major step forward in our journey that I welcome and I wish to pass my thanks to all those that have embraced this campaign.
More needs to be done(and will be done)
So save specific circumstances (for example where the land is leased) leasehold houses are no more.
Ground rent is set to zero. Developers are “being asked to do something about existing ground rents” If they don’t action is implied. So I expect at some stage, all leaseholds will have an automatic 90 year extension to knock out the ground rents being imposed if not offered voluntarily.
This action(or the mere threat of action) threatens the financial viability of the off shore ground rent investment companies. This is going to make it harder for them to access investment for new projects.. Their projected incomes (against which they have borrowed) is also set to fall dramatically when a fairer system of calculating enfranchisement/lease extension is adopted..
Thank you LKP and all those who support LKP.
What about Service charges?
I do feel enslaved by Firstport who have been enabled by the law to send me services charge demands for services not rendered and enjoy the proceeds at my expense.
Perhaps now the APPG will look at the Park Home Sector and bring Pitch Fee increases in liune with CPI and not RPI.
Congratulations to Sebastian-great TV coverage tonight.
Let’s hope this is the beginning for the end of fleecehold. Daily abuses still going on by all powerful managing agents.
Hi,
Do you have a link so I can watch it please?.
Jeffrey
Don’t think debate was televised but full transcript on Hansard
https://hansard.parliament.uk/Commons/2017-12-21/debates/40FBC1D0-1C51-48B1-B2D2-075C6A6087B0/LeaseholdAndCommonholdReform
Debate highlighted shameful abuses. My fear is no mention of a cap or zero ground rents for millions of existing leaseholders who will end up worse off in comparison to newer builds with stiputated zero value GRs.
Imagine the same type of property at the same price value with the only difference being vastly different ground rents.
Long way to go
Was televised. Currently on iplayer BBC Parliament channel – search for Westminster Hall 21 Dec 2017.
Was transmitted Saturday night on BBC Parliament channel.
Nailed everything.
Brilliant Thankyou to you both. Will take a look on i-player now.
Merry Christmas!.
Great news at least on some fronts – thanks to your organisation and supporters. With caveats:
Why are they not banning leasehold completely for new houses?!
No mention of consumer protection – esp those who have “uncontrolled charges”
Good that EXISTING leaseholders will find it easier and cheaper to buy the freehold: but the devil is in the detail – how cheap?
The main obstacle might be the Law commission itself- full of self-interested people making vast amounts of money from leasehold!
the people profiting from this system should not be allowed to keep their money or to continue raking it in.
But at least the wrongs are now recognised. and agreed on by people who matter
It is good news, but don’t trust them yet!
“Buy to let landlords reduce rents in anticipation of leasehold reform!”
Source: Goose & Gander Monthly. December 2017.
Hi folks, can anyone maybe explain what this means for our family – we are about to purchase a new build house that is leasehold, with a view to buying the freehold once the house purchase has gone through. We’ve not yet exchanged, this is likely to be mid January with completion in March. We’re looking at a £6k bill to buy the freehold, is this change going to have any impact on these plans? Thanks!
Mark, you are not about to purchase a new build house.. What you are about to purchase is a document that gives you the right to occupy a new build house for a time limited term..
Since the amount of ground rent has a material effect on the value of the freehold, abolishing ground rent will have a significant impact on the cost of purchasing the freehold.
Thanks Michael, so there is a chance that if we don’t buy the freehold when we complete the price of it will increase?
Be very careful that the house builder is not in the process of selling on the freehold to a third party.
Be very careful that the house builder is not in the process of selling on the freehold to a third party.
Hi Mark. It is Christmas so here is so free advice. Do not buy leasehold. Insist upon a freehold deal or be prepared to walk away. Unless the £6k has been agreed in writing (and includes the other party’s costs) then you can bet that it will increase, esp. if the house builder flogs off the freehold to a third party without your knowledge or approval before you have had an opportunity to buy it. Do not be surprised if the £6k turns into £10k-£15k (incl. costs) or worse! Caveat Emptor: let the buyer beware. For your information, inadequate legal advice and gamesmanship by the freeholder’s agent at the time of purchasing a leasehold flat cost me an extra £15k to extend the lease two years later. We are now facing a massive an unjustified hike in service charges and I now have to spend all my spare time getting to grips with the law, leaseholder rights and codes of practice and it is all a real pain in the !?@£. I can tell you from firsthand experience that leasehold is a form of entrapment and enslavement to a freehold investor class of people whose true colours come to the fore when you start to challenge them, and so my advice is to take control from the outset and do everything you can to buy the freehold before you exchange contracts. Remember Caveat Emptor. Do not be deceived by the salesmanship, glossy magazine covers and flash kitchen and new carpets. Do your homework and do not be bounced into hasty decisions. Happy Christmas: enjoy the turkey!
Ps.
Have a read of the House of Commons briefing note on Leasehold that LKP has kindly made available on this website and it will tell you all you need to know about the problem of leasehold. If MPs need an extensive briefing note to get to grips with leasehold, what hope the rest of us! Caveat Emptor.
Leasehold property is covered by a Lease Agreement which is only a long term rental contract .
Ask for the annual ground rent to be reduced to a peppercorn and see if the seller will give this ?
Thanks Ollie – I guess the issue with doing that is that there is still the uncertainty around the long term leasehold situation, and in effect we never really actually “own” the property. From what I can see from the reports there is a chance that the government may force/incentivise Housebuilders and leasehold owners to sell the freehold on but as with anything political the impression given isn’t always what happens!
Counting on this govt staying in office long enough to enact this legislation might be counting chickens before they are hatched.
I would recommend simply avoiding leasehold entirely; and I speak as someone with almost 20 years experience of it. I would simply never do it again.
Hi Mark, please listen and take heed of the excellent advice from the above posters. They all know what they are talking about.
With no disrespect I am shocked, and concerned, that you are in process of buying a lease (NOT a property) A lease allows you to live in a property subject to terms and conditions for the term of the lease, then you pay possibly thousands to renew it or sell it (the lease to someone else for peanuts as it is a short one) and walk away.
In view of all the bad press over the last 12 months or so, why are you considering leasehold.
Is it because the negative info about leasehold is not getting out there to the general public?
Firstly, as mentioned in above posts, these amendments to leasehold are NOT guaranteed , for various reasons, to be implemented.
Secondly, if/when they are, the change will not be backdated to properties all ready purchased to the same criteria.
The third, and most important worrying thing,is you infer that you have been offered the opportunity to purchase the freehold.
However, if you search this site, and many others, plus press articles, you will see that many purchasers were promised purchase of their freehold by numerous prominent builders and then these builders sold the freeholds behind their backs.
All that I can say is, DO NOT PURCHASE this property you are looking at unless you can actually buy it as totally freehold. It is too dangerous to take it on on the understanding you can buy the freehold later.
Assuming it is on an estate, even if you buy freehold, you still have to look out for any possible “estate yearly management charges”, another money making scheme some of these greedy builders have introduced.
Obviously I do not know your circumstances but, the bottom line to me is, if you cannot buy the house FREEHOLD, before you sign anything, do NOT buy it. Find a freehold property instead.
I would still walk away even if I was going to lose £10k, it will be cheaper in the end.
Leasehold never stops – permission to put a conservatory or a shed up. Fit double glazing, Fit a different front door – you have to pay fees to get permission for literally anything. If you don’t tell “them” costs, inc court will be even worse.
It would be helpful if you posted on how things transpire.
We wish you all the best
Mark, sorry to bang on but not quite sure how up to speed on the leasehold probs you are.
Do not believe anything that anyone says or promises in the Sales office.
Ensure any agreements are from a senior person at head office and then pass for assessment to your solicitor.
Do NOT under any circumstances use a solicitor recommended by the builder, his sales team or anyone that has any connection to the builder, whatever the clever incentives they offer..
Use a totally independent solicitor and do not be afraid to ask the pertinent questions and be sure the solicitor fully understands the current situation
The above post from Paul Joseph sums it all up to perfection.