Leaseholders Freed From Costly Contract Terms

Following CMA action, leaseholders with Countryside Properties will no longer be subjected to ground rents that double every 10 or 15 years. Countryside Properties – one of the UK’s leading housing developers – has voluntarily given formal commitments to the Competition and Markets Authority (CMA) to remove terms from leasehold contracts that cause ground rents to double in price. The effect of these increases, which kick in every 10 to 15 years, is that people often struggle to sell or mortgage their home and their property rights can be at risk, for example, if they fall behind on their rent. Read more on the GovUK website.

https://www.gov.uk/government/news/leaseholders-freed-from-costly-contract-terms 

Leasehold Reform Bill Published

The Leasehold Reform (Ground Rent) Bill has been published and when implemented aims to help tackle inconsistency and ambiguity of ground rents for future leaseholders. The UK Government is introducing the Bill so that ground rents in new residential long leases in England will have no financial demand for all future qualifying leases and that leaseholders do not face unfair terms or significant ground rent liabilities. The first reading took place on 12 May which started the Bill's journey through the House of Lords. However, no further scheduled dates are in place for future readings to finalise the legislation. Read more on the Arla website.

https://www.arla.co.uk/news/may-2021/leasehold-reform-bill-published/

Freehold Company Hikes Ground Rents For Leaseholders Facing Huge Fire Safety Bills

 A freehold company has hiked the ground rents of leaseholders facing crippling bills to repair fire safety defects in their building. E&J Estates has enacted its right to a 10-year ground rent review at the Hemisphere Building in Edgbaston, Birmingham, with most rents rising from around £300 to more than £400 a year. The 344-home development is facing the prospect of a £13.8m remediation project after a fire engineer’s report identified combustible EPS insulation and build defects in the external facade. E&J said the hike was necessary because of the demands of the pension fund it invests the money in. Read more on Inside Housing.

https://www.insidehousing.co.uk/news/freehold-company-hikes-ground-rents-for-leaseholders-facing-huge-fire-safety-bills-69859?utm_source=Housing60&utm_medium=email&utm_content=article_link&utm_campaign=H60

Leaseholders To Be Given Right To Extend Leases By 990 Years With No Ground Rent

Hundreds of thousands of leaseholders stuck in unsellable homes with escalating running costs have some light at the end of the tunnel. “Feudal” leasehold laws are to be swept away, making it easier – and cheaper – for them to extend the leases on their homes. The key change unveiled by housing minister Robert Jenrick is the right to extend their leases by almost 1,000 years. Once a lease is extended leaseholders will no longer have to pay annual ground rents to their freeholders either. Read more on the Homes & Property website.

https://www.homesandproperty.co.uk/property-news/leasehold-reform-extend-ground-rent-a140724.html

MPs Blame Bad Legal Advice For Families Trapped In Unsellable Houses

Lawyers have been accused of failing thousands of families stuck with toxic home leases. They face a Government-backed inquiry over claims they did not warn buyers about 'feudal' terms and rip-off charges. Some families have been forced to pay rent on the ground beneath their homes that can double every ten years. They also face exorbitant 'permission charges' to make changes such as building a conservatory or replacing a front door. However, many of those affected say their conveyancing solicitor had not made them aware of such costs – or that they had struck deals with developers including referral fees. Read more on the Mailonline.

https://www.dailymail.co.uk/news/article-6676623/Leasehold-row-MPs-blame-bad-legal-advice-families-trapped-unsellable-houses.html

Expand 'Commonhold' Ownership System, Government Urged

The rarely used “commonhold” system of home ownership should be expanded as an alternative to landlord-controlled leaseholds which are increasingly resented, the Law Commission is recommending. In a consultation, the government’s official adviser on law reform is calling for commonhold to become widely available because it permits anyone to own a freehold flat without the threat of a time-limited lease expiring. Commonholders become members of a company that owns and manages the shared areas and structure of a building. There is no landlord. The proposal would primarily benefit flat owners, many of whom are young and climbing the first rungs of the property ladder but still have to pay substantial annual ground rents. Read more on the Guardian website.

https://www.theguardian.com/law/2018/dec/10/plans-expand-commonhold-home-ownership-system-landlords-uk

Leaseholders Urged To Claim Share Of £500m 'Unfair Ground Rent'

Solicitors and developers caught up in the leasehold ground rent scandal may be forced to pay out as much as half a billion pounds, it is claimed. In recent years some of Britain’s largest housebuilders sold leasehold homes, where owners were locked into contracts which obliged them to pay rapidly increasing ground rents to freeholders. Investors – including pension funds or other specialist firms – purchased the freehold on the houses, attracted by this guaranteed rising income. Read more on the Daily Telegraph website.

https://www.telegraph.co.uk/money/consumer-affairs/leaseholders-urged-claim-share-500m-unfair-ground-rent/

Leaseholds On New-Build Houses In England To Be Banned

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. In a blow for major housebuilders the communities secretary, Sajid Javid, will set out plans to “ban new-build houses being sold as leasehold as well as restricting ground rents to as low as zero”. Flats can be continued to be sold as leasehold, but ground rents will be restricted to a “peppercorn” level and therefore be of little financial value to speculative buyers. The ban is expected to come into force after an eight-week consultation period. Read more on the Guardian website.

One In Seven Help To Buy Owners Are Locked Into Leaseholds

Developers are abusing the Government’s flagship Help to Buy scheme by selling new-build homes with punishing leases. By the end of last year, leasehold houses made up 15 per cent of properties in the taxpayer-funded project. But the arrangement means buyers do not own their home outright and are forced to pay yearly ground rent to the freeholder – with some fees doubling every decade. Developers often sell the contracts to investors who then charge families huge sums to buy the freeholds back. It is now feared the taxpayer could lose out because the onerous terms make it almost impossible to sell leasehold houses on – leading to a slump in prices. Read more on the Daily Mail website.

Housebuilders Must Halt Leasehold Sale Of New Houses

Major housebuilders may be forced to spend millions compensating home buyers locked into unfair leasehold contracts, following a warning by housing minister Gavin Barwell. Barwell has ordered developers to halt future sales of leasehold houses or face government action next year. He also told developers to come up with solutions for householders already stuck in homes where soaring ground rents have made their property virtually unsaleable. Developers have been selling houses as leasehold, with clauses which allow the ground rent to double every 10 years. The freeholds are then sold on to private companies which extract the ground rent, charge high fees if a homeowner wishes to make alterations, and refuse to sell the freehold except for a huge premium. Read more on the Guardian website.

The New-Builds Catching House Buyers In A Leasehold Property Trap

Thousands homebuyers have been trapped by a controversial trend among developers to sell homes as leasehold when they previously would have been freehold. The buyers are given 999-year leases but later find that buying the freehold is prohibitively expensive.  The trap for unsuspecting buyers comes from the escalation in ground rent in the small print of long leases. Initially, it looks affordable. The developer gives the buyer a 999-year lease, with the ground rent set at, say, £295 a year. The contract says the ground rent will double every 10 years. To the company that buys the freehold, the income is valuable. By the time a 28-year-old buyer with a 30-year mortgage comes to the end of their loan term, they will have to pay £2,360 a year in ground rent. And if they don’t pay their home can be seized with no compensation. Read more on the Guardian website.