All newly built homes must be freeholds under proposed new law - here’s why

By Lloyd Bent
Friday, 28 June, 2019, 13:18

All newly built homes will have to be sold as freeholds, the government has announced.

The plans aim to bring an end to exploitative leasehold charges and make the process of buying and selling houses easier, giving homeowners more freedom and control.

Changes to the laws around housing could also see renters able to ‘passport’ their deposit from one landlord to another, meaning they won’t need to fork out for one deposit before getting their old one back.

New measures will also prevent managing agents and freeholders from charging too much and taking too long to provide information on how to sell their homes.

There is to be a 15-working day limit on this, and a maximum £200 that can be charged.

Ground rent charged by freeholders is also expected to be slashed to zero.

Leasehold properties that have already been built will remain that way, and will not be forced to change to freeholds.

What is leasehold?

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People who own leasehold properties only do so for a certain amount of time and may face limitations and conditions when it comes to alterations to the property.

They normally have to pay ground rent, maintenance fees, insurance costs and annual service charges to the freeholder, who actually owns the building and the ground it sits on permanently.

But this system has drawn criticism as the charges can spiral.

Communities Secretary James Brokenshire has spoken to the public investment body Homes England to address and make changes to Help to Buy contracts to prevent the selling of new leasehold houses.

Speaking at the Chartered Institute of Housing conference in Manchester, Mr Brokenshire said: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market.

“Last year we consulted on proposals including the leasehold house ban and ground rent reduction. ‘Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.

“We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows, helping us deliver our promise to make the home buying and selling process quicker, cheaper and easier.”