Within England there are currently 1.4 million leasehold houses, with this number growing year on year. However, the Government has recently announced that they intend to ban leaseholds for all new build houses as they have been reported as ‘unfair’ and ‘abusive’. There are also plans to set new ground rents at zero for long leasehold flats and houses. Direct Line has estimated that the typical ground rent currently stands at £371 per annum.
Leasehold’s were initially implemented for flats and apartments with shared facilities, but in recent years there has been an increase on selling leasehold houses. If that house is being sold at a reduced price (e.g. through a shared ownership scheme) then using a leasehold structure may be justified but, even so, some buyers may not be fully aware of the associated costs, which can make it more expensive in the long term.
A consultation by the Government received a huge response with the vast majority expressing their concern about buying and/or living in a leasehold house. Unfortunately this ban will not apply retrospectively to the houses which are already in place with these terms, but going forward there are also plans to make it easier and cheaper for existing leaseholders to buy-out their freehold as the Government aims to help fix the broken housing market and deliver a clearer system for homeowners.
More information on the Government’s plans for the housing market can be found HERE
These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.