CRACK DOWN ON TOXIC LEASEHOLD DEALS

On 28 March 2019, 45 freeholders and developers signed a public pledge to 'crack down on toxic leasehold deals'. This included a pledge to offer existing leaseholders ground rents linked to the Retail Price Index (RPI) and for freeholders to inform leaseholders in advance of any change to freehold ownership. More info…

What are we calling for?

The Government’s response to Tackling unfair practices in the leasehold market indicated that big steps would be taken in England to stop further abuse of the leasehold market. This included preventing the sale of new build leaseholds houses, removing the support of the Help to Buy Equity Loan in the purchase of leasehold houses and ensuring that ground rent on all new long leases would be set at zero. More info...

In our submission to the Housing, Communities and Local Government Committee we outlined our position on what is being done and what needs to be done in reforming leasehold.

The Government must:

• Prevent the sale of new-build leasehold houses unless there is a legitimate reason, such as shared ownership with a staircasing lease.
• Prevent doubling of ground rents and ban ground rents where they increase above inflation for existing leaseholders.
• Set ground rents at zero on all newly established leases.
• Introduce legislation to exempt leaseholders from Ground 8 possessions claims.
• Make enfranchisement easier and simplify the process for lease extensions.

Further action:

• Legislate to ensure developers compensate consumers to remedy onerous clauses.
• Remove the requirement that leaseholders must own the lease on their house for two years before making a claim and ensure that developers do not build on land when they do not own the freehold to.
• Amend the Landlord and Tenant Act 1987 to extend the Right of First Refusal to houses and simplify Right to Manage.
• Introduce overarching statutory regulation of the property sector.
• Create a digital log-book for each property that is bought and sold.

Support existing leaseholders:

• Purchasers of new build homes should have access to an ombudsman scheme.
• All new house builders sign up to the Consumer Code for Home Builders.
• Where there is no managing agent, freeholders must sign up to a redress scheme.
• The government should implement a code of practice and disclosure document concerning event fees in specialist retirement developments as drafted by the Law Commission in March 2017.

Leasehold properties in Wales

Whilst the Welsh Government hasn’t adopted an outright ban on leasehold houses, improvements to the leasehold sector are being considered. NAEA Propertymark is a member of the Welsh Government’s Task and Finish Group set up to reform the leasehold sector.

In July 2019, the group released its report which identified failings in the leasehold system. They put forward recommendations on code of practice, accreditation of agents, options available to freehold homeowners and how to improve education, training and awareness. The report will advise the Minister on leasehold reform including the reform of practices carried out by property agents.

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