New Government funding schemes will no longer be able to use the money for unjustified new leasehold houses, in a continuing push to tackle unfair and abusive practices within the leasehold system.
The move was announced by Communities Secretary, The Rt Hon James Brokenshire MP, as he outlined the Government’s next steps towards delivering both the homes the country needs and a fairer, more transparent system for homebuyers.
Among the measures announced today are:
New proposals for three-year minimum tenancy terms, with a six-month break clause, to make renting more secure helping renters put down roots, and give landlords longer term financial security.
- The release of £450 million to speed up delivery of homes on sites of surplus public sector land and encouraging pace and modern methods of construction as a part of the building process.
- The launch of a new £100 million Community Housing Fund, to deliver affordable housing tailored to local needs, putting communities in the driving seat.
- The Communities Secretary also confirmed that through Homes England almost 1,000 new affordable homes will be built on a previously undeveloped site at Burgess Hill, Sussex demonstrating how a more strategic – and assertive – approach to getting homes and large scale projects built was delivering results. The Burgess Hill site will also see essential, new infrastructure built with two new primary schools, a secondary school and a range of leisure facilities including a new public woodland.
Speaking to an audience at the Policy Exchange The Rt Hon James Brokenshire MP, Secretary of State for Communities, said:
“We need to get everyone on board to build at scale and pace to build the homes this country needs.
“But this isn’t just about getting the numbers up. We don’t have to make a false choice between quality and quantity.
“It’s also about building places that people are happy to call home. Places where they can come together in strong, thriving communities for generations to come.”
Leasehold generally applies to flats with shared spaces, making multiple ownership more straightforward, but developers have been increasingly selling houses on these terms – adding further costs to over-stretched house buyers.
The Government is already working to make it cheaper and easier for existing leaseholders to buy-out their freehold and improve information available about redress for those consumers who face the most onerous terms.
Changes will also be made so that ground rents on new long leases – for both houses and flats – are set to zero.
And with 1.4 million leasehold houses across England and the number of leasehold sales rapidly growing, this latest announcement is another example of the Government taking action to make the leasehold market fairer.
The Secretary of State continued:
“We have seen leaseholders in new-build homes facing unexpected costs rising every year that bear no relation to services and that’s not fair.
“So from now on any new Government funding scheme will contain the condition that the money cannot support the unjustified use of leasehold for new homes”.
Related posts:
Surge in new-build leasehold houses with £1.9 billion sold last year
Government to ban leasehold houses and set ground rents ‘as low as’ zero
Leasehold houses have been sold for more than freehold ones, reports Telegraph
Leasehold houses scandal widens as developers face MPs
MP urges Commons to condemn developers selling leasehold houses with onerous ground rents. And names Taylor Wimpey, Persimmon, Bellway and Adriatic Land …
Cladding forum for private leasehold blocks – 18th July
So what would make a leasehold house justified? I thought erstwhile Squire Javid, perhaps soon to be elevated to Prime Squire, said houses would no longer be leasehold?
Any news on the reform bill? How many bills are published on the last day of term?
Brokenshire continues the pathetic response to much needed abolition or reduction to peppercorn of all leasehold ground rent for existing and new build properties.
Government has promoted leasehold houses and excessive ground rents by doing nothing for years with Help to Buy terms and conditions.
and please can we have no more sickening praise of Taylor Wimpey by the Prime Minister or any other pubic official.
Lots of things to welcome here and Mr Brokenshire is right to voice concern about Leasehold.
Now we need that Select Committee Inquiry into the leasehold scandal and full and proper redress for leaseholders.
This is NOT changing leases to increase in line with inflation; it’s about developers making good the assurances they gave verbally to so many of us that we could buy our freeholds for a few thousand pounds at anytime in the future.
This was blatant mis-selling and needs addressing in the same way Government took action on mortgage, pension and PPI mis-selling.
Hmmm, at long long last the Gov hint that they are going to do things. How long can it take.
I am sorry but I still don’t trust the government. They play on words.
They could have sorted the Help to buy Scheme (Read [ help builder to sell scheme) overnight , ages ago.
The Gov say “New Government funding schemes will no longer be able to use the money for unjustified new leasehold houses”. So is this new schemes moving forward or does it include current HTB as well.
They continue with ““So from now on any new Government funding scheme will contain the condition that the money cannot support the unjustified use of leasehold for new homes”
There is no 100% statement where the Gov confirm the HTB scheme will be included.
May I also remind the Gov that it is not “Government Funded schemes – it is TAX PAYERS Funding these schemes
So Leasehold on new homes could be “justified” if the home is built on leasehold land.
Clearly a house cannot be freehold if it sits on leasehold land.
Suppose then a hypothetical developer(let’s call them Wompey Retailer) rely heavily on Help to Buy for many of their sales?
They buy the land to build the homes. and sell those homes as leasehold.
The Government may now term such an action as an “unjustified lease” since there is no actual need to sell the homes on a leasehold basis?
What then if Wompey Retailer buy the land and sell that land to Wompey Retailer Realisations BVI?
Wompey Retailer Realisations BVI(who are now the freeholders) grant Wompey Retailer a long term lease on the land?
Would that not mean the homes would be built and leasehold land and therefore could not be sold as a freehold?
When a system is as thoroughly floored as leasehold clearly is no amount of tinkering with the system in an attempt to curb the worst of the excesses will ever work?
Micheal, there is one flaw in your plan. In the mad world of leasehold, you can have a freehold house on leasehold land.
Yes Tiler Wonkey can do the things you suggest and might even by the lease of the land from Permission builders who in turn had created the lease from a piece freehold land just before planning permission granted sometimes local authorities play the game as well.
So if we return to the right to have a freehold house on a piece of land sold as leasehold. This arises because after 2 years you can still buy the freehold even though the site sold as leasehold or at least you can on many sites. So that then raises the question will the government accept that anything much beyond things like crown land should be sold as leasehold when the “homeowner” can already buy the freehold anyway??
I wondered who would be the first to spot the flaw in my plan? Well done Martin (you beat Sebastian!)
Taylor Wimpey (not to be confused with Wompey Retailer) have just recorded an annual profit of £841,0000, 000.
The average building cost of a Taylor Wimpey home is circa £143,000, whilst the selling price is circa £296,000.
The overall return on assets is a very healthy 32.4%, whilst the operational trading profit margin is put at 21.2% .
Currently Taylor Wimpey have a 5 year supply of land available for development.
We know Taylor Wimpey have set aside £130,000,000 for the “doubling” ground rent scandal.
To put this amount into some kind of context in 2017 Taylor Wimpey paid out £450,000,000 in dividends.
When the good Lord said unto mankind, “Go forth and fuck each other”, he intended for each of us to engage carnally and multiply our numbers. What he didn’t mean was for homes to be sold on a leasehold basis, and with government connivance for those with power and money to fuck those without power and money.
The Lord might well be good but he had lousy lawyers whose drafting of his injunctions was flawed.
But what about leasehold flats?
Yes where is the law that allows ground rents to increase with inflation & when will they be abolished altogether? Doesn’t the freeholder make enough from extortionate service charges already?