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New leasehold measures approved by Government and industry

Friday 29 March 2019

In a press release from the Minister of Housing, Communities and Local Government, James Brokenshire MP, has announced that it will accept many of the Law Commission’s recommendations for Event Fees.

Over 40 property developers and freeholders have also signed a government-backed pledge to remedy some of the issues faced by existing leaseholders. The signatories include Taylor Wimpey, Bovis Homes, Barratt Homes, Persimmon, and Bellway amongst others.

The Government has stated that it will introduce a new statutory Code of Practice to ensure that Event Fees cannot be charged unexpectedly, should this be ignored, any fees breaching this will be unenforceable.

Transparency is also high on the Government’s agenda. Developers and estate agents will be required to make all fees fully transparent and fully communicated to potential buyers before purchase. This will allow prospective buyers make a fully informed decision prior to purchase.

NAEA Propertymark has long called for extensive reforms to the leasehold tenure. We supported the Law Commission in its quest for the introduction of codes of practice to require developers, operators and managing agents to bring Event Fees to the attention of prospective buyers.

The Communities Secretary, Rt Hon James Brokenshire MP, said: “Since becoming Communities Secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market.

The new industry pledge – signed by leading freeholders and property developers – will further support existing and future leaseholders by protecting them from onerous fees.

“It’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge, and I want to see others who have not yet signed up do the right thing.”

Commenting on the announcement Mark Hayward, Chief Executive, NAEA Propertymark: “Today’s news is a victory for those stuck in leases with onerous ground rent payments, charges for making alterations to their properties, and ultimately, unable to sell their homes.

“Our Leasehold: A Life Sentence? report found that 45 per cent of those who bought a leasehold house in the last ten years, didn’t realise they were only buying the lease until it was too late. As a result, 62 per cent feel like they were mis-sold and the vast majority (93 per cent) say they definitely wouldn’t buy another leasehold property.

“Buying a property is a huge undertaking and it should be an exciting time, but for thousands of homeowners, it’s led to financial difficulty as they’ve become trapped in confusing contracts with freeholders.  The Government promised to ban the sale of new leasehold houses in 2017, but today’s pledge, backed by developers, is a triumph for those already tied into leases.

“It’s also positive that the retirement sector has been included in the Government’s pledge. With event fees being reformed, older homeowners who have historically been stung with unfair charges when they become ill or die, will be treated fairly when they are at their most vulnerable.

“These measures are a huge step in the right direction towards fixing Britain’s broken housing market.”

What we are doing to help you

Guidance

NAEA Propertymark has recently produced an ‘Understanding Leasehold’ best practice guide to help people buy and sell leasehold property. Log into the members’ area to download your copy or attend a Regional Workshop to pick up a hard copy version. 

Consultations

In October 2016, NAEA Propertymark responded to the Law Commission's consultation regarding Event Fees in Retirement Properties which can be viewed here.

In September 2017, we responded to the Government’s consultation on Tackling unfair practices in the leasehold market and was followed by a leaseholder reform inquiry that was launched in July 2018 by the Housing, Communities and Local Government Committee. In September 2018 we submitted written evidence to the inquiry.

Housing for older people

We responded to the Housing of Commons’ Housing Committee’s inquiry into Housing for Older People in March 2017 and are referenced in the Committee’s report. As part of our written evidence to Parliament, we argued that traditional retirement homes are limiting, and do not offer a great enough incentive for older people to downsize.