Recent practices surrounding leasehold sales and ground rents for new-build houses, in particular, have been questionable. While flats have more common areas which require upkeep, one does question, what is the benefit of charging ground rents to houses? With lease terms allowing these rents to increase periodically combined with the added costs of renewing short leases, consumer protection will be welcomed by many. However, the reforms are unlikely to go far enough for existing holders of onerous leases, with large numbers already facing significant challenges selling their properties.
Given the potential elimination of a profitable revenue stream, many hope this does not lead to increases in sale prices of new build homes. As ever with Government initiatives, getting the detail right will be crucial to ensure that any unintended consequences are minimised.
Builders are to be banned by the government from selling houses as leasehold in England and ground rents on flats could be cut to zero following widespread outrage over exploitative contracts.