Leaseholders demand action from government as ground rents soar

August 1, 2017 by Brendan O'Neill

Home owners

Homeowners are demanding that the government takes action against abuse of the current leasehold system.

Claims have been made that up to 100,000 homeowners are trapped in homes which they say are “unsellable”. Sajid Javid, the communities secretary, revealed plans to stop new build homes from being sold as leasehold in England, following the anger at contracts which are exploitative. Although the plans have been welcomed, they only apply to future homeowners, leaving existing property owners in the lurch.

Many homeowners have found themselves in a situation where every 10 years, the amount of the lease doubles. In October last year, a report in the Guardian outlined the plight of a first time buyer near Birmingham, whose ground rent had already reached £8,000 per annum. The problem has exacerbated over the last few years, especially in the north, where developers have been selling homes as leasehold, when they would typically have been freehold previously. These are often sold to third parties, usually offshore investment firms.

Taylor Wimpey announced in April this year, that it would stop selling new build properties as leasehold, unless it didn’t own the freehold. A spokesperson for the company said that it was working with freeholders to switch its customers’ doubling leases to ones which makes it easier for them to sell the property or get a mortgage on them.

CeMAP qualified mortgage advisors are able to help potential homebuyers understand the difference between leasehold and freehold, and what it could mean for them in the future.