Currently, leases on newly built homes sometimes include dramatic increases in ground rent over the term and also high management charges for the upkeep of communal areas.

The Government is seeking to tackle these unfair practices in the leasehold market and have issued a consultation paper.

The  Government proposals include: 

Stopping house builders from selling new houses on leasehold basis;

Restricting ground rents so that they have no financial value;

Finding ways in which they can tackle existing onerous ground rents; and,  

Providing freeholders with equivalent rights to leaseholders as to unfair service charges or management charges. 

Whilst the government is right to clamp down on house builders who abuse their position; there will be those investors who have purchased the right to claim ground rents on a residential estate who will now find their investment worthless.

Lenders to home buyers, most recently Nationwide are already saying that they will not lend against new homes with onerous ground rents. This may have a knock on effect on the sellers who purchased their properties as new builds and are now looking to sell on. Pending the governments proposals to tackle existing onerous ground rents, such owners may find the value of their properties effected.

As always there are winners and losers in the proposals.

Consultation ends on the 19th September 2017. Anyone wishing to add their voice to the consultation can complete an online survey at: https://www.surveymonkey.co.uk/r/leaseholdhouse

Alternatively you can email your response to the questions in this consultation to: LeaseholdHousesConsultation@communities.gsi.gov.uk