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Can Our Leasehold System Be Repaired?

on Wednesday, 12 June 2019.

With 54% of flats sold on a leasehold basis* - where buyers only have the right to occupy the property for a fixed period of time, and do not own the building outright ...

...and harsh ground rents that can soar over a short period of time, the residential leasehold sector is in desperate need of change.

Over the years, several proposals to implement change have been suggested. These range from reducing all ground rent on new leases to abolishing the leasehold system altogether, and creating a form of 'commonhold' where residents would manage their own developments. Unfortunately, most proposals have their own set of problems that prevent them from tackling consumer protection effectively. 

The government has now backed a pledge from landlords, managing agents and developers, that may bring about positive change and raise industry standards. It would introduce an industry-led code of practice including:

  • the removal of onerous ground rents
  • the abolition of new leasehold houses
  • new measures to ensure that consumers understand the implications of purchasing a leasehold property

Although no concrete legislation has been brought forwards by the government to enforce the code, it is hoped the voluntary public pledge will put public pressure on housebuilders to meet the new standards.

The code would also hopefully create fairness and greater transparency in the industry. However, it remains to be seen whether, in practice, the pledge will get to the heart of the problems and give greater protection to consumers.

* House of Commons Library, 2019


For specialist Real Estate advice, please contact Madeleine Wakeley on 01923 919 315 or complete the below form.

 

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