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In a recent governmental consultation, there was an overwhelming response in favour of government plans to tackle issues within the UK leasehold property sector. The government has now announced what measures it will be taking to tackle this.

Their answer? A ban on leaseholds for almost all new build houses.

Here, our conveyancing solicitors outline the changes and reveal how they think this will affect the UK housing market.


The Leasehold Changes 2018 Summarised

On February 7th 2018, the UK Government released the Housing White Paper, a document which detailed priorities for housing and how the government will tackle the UK shortage in coming years. The paper revealed that there will be efforts made to plan for the right kind of homes to be built in the right places, at a faster rate, to help people find affordable housing sooner rather than later.

Communities Secretary at the time, Sajid Javid, revealed that in order to make a fairer and more transparent system which cuts out unfair and abusive practices, the UK government is banning leaseholds plans for most new build houses. He said:

‘It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.

‘It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this government is now putting in place will help create a system that actually works for consumers.’

Please note: These measures currently only relate to England, but may be extended to the rest of the UK if proven successful.

Of those where leases are allowed, where shared ownership is required for example, changes will also be made so that ground rents on long leases are set to zero.


What About Existing Leasehold Properties?

The changes won’t only be felt by purchasers of new build properties.

The government estimates there are currently 4.2million residential leasehold dwellings in England alone and, therefore, will make it easier and more affordable for existing leaseholders to buy-out their freeholds, and will make information more readily available for redress for those with the most arduous terms.

There will also be an internal review of the support and advice given to leaseholders to ensure it is fit for purpose and in line with new legislation.


How Will This Affect the Property Market?

The original consultation received more than 6,000 submissions expressing concern over the system. Therefore, it will come as no surprise that the scheme to date has been praised as a first step in tackling the housing issue our country is blighted with and will increase the availability of affordable housing where it is needed most.

However, there will be drawbacks for developers; mainly: less income from annual ground rent fees and possible restricted lending, and many have wondered how this will impact the value of existing leasehold properties.


Want to Learn More About Purchasing New Build Houses?

Whether you’re considering buying a leasehold new build or a freehold equivalent, our friendly and knowledgeable team can inform you of the legalities and guide you through the process. Speak to our conveyancing solicitors team today to learn more.


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