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All new-build houses will be sold as freehold in a move to tackle unfair leasehold practices and prevent future home-owners from being trapped in exploitative arrangements, the Communities Secretary said.
In a wide-ranging speech to the Chartered Institute of Housing conference in Manchester, the Rt Hon James Brokenshire MP confirmed plans to abolish the selling of new houses as leasehold properties and reduce ground rents for new leases to zero putting cash back into the pockets of future homeowners.
To stop freeholders and managing agents taking as long as they want and charging what they want to provide leaseholders with the vital information they need to sell their home, ministers will introduce a new time limit of 15 working days and a maximum fee of £200 to make the home buying process quicker, easier and cheaper.
The Secretary of State has also instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.
And where buyers are incorrectly sold a leasehold home saddling them with a property that could ultimately prove difficult to sell, consumers will be able to get their freehold outright at no extra cost.
The measures announced today demonstrate the government’s commitment to ensure decent and fair housing for the people and communities that need them, as it strives to deliver 300,000 new homes a year by the mid-2020s.
Other important proposals unveiled include new proposals to make it easier for renters to transfer deposits directly between landlords when moving; extra funding for 19 new garden villages; and radical new measures to speed up planning applications.
Communities Secretary Rt Hon James Brokenshire MP told the Chartered Institute of Housing conference: “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.
“And we will legislate to ensure that in the future save for the most exceptional circumstances all new house will be sold on a freehold basis. We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.”
The government’s proposals have already had a fundamental impact on the housing market since they were unveiled, with the sale of leasehold houses falling from 11% to just 2% this year.
New measures will also be taken to prevent developers selling leasehold houses through the Help to Buy Scheme preventing taxpayers’ money from directly supporting the unjustified sale of leasehold houses.
The Communities Secretary has today instructed Homes England to renegotiate contracts with all Help to Buy developers to explicitly rule out the building and selling of leasehold houses, other than in exceptional circumstances.
This all comes as a further 18 leading property developers, managing agents and freeholders including Crest Nicolson and Keepmoat Homes have signed up to the government’s industry pledge, committing them to freeing existing leaseholders trapped in onerous deals where ground rents double every 10 or 15 years. This takes the total number of signatories to over 60.
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