Action by the Government to crack down on unfair leaseholds has been welcomed by Ellesmere Port and Neston MP Justin Madders (Lab).
The campaigning MP has been backing activists in Ellesmere Port who have discovered they have problems with the leaseholds on their houses which can include being sold on, include charges for extensions or see ground rents doubling every 10 years.
Radical new proposals to cut out ‘unfair abuses’ have been announced by the Government in a major move intended to deliver a fairer, more transparent system for home buyers.
Communities Secretary Sajid Javid has set out plans to ban new build houses being sold as leasehold as well as restricting ground rents to as low as zero. Leasehold terms can often expose homebuyers to unreasonable and long-term financial abuse, he believes.
The proposals have also been welcomed by Ellesmere Port resident Katie Kendrick who has been campaigning on this issue for some time and appeared on BBC TV's Victoria Derbyshire show on Tuesday morning to give her reaction to the latest development.
She said: "It is a step in the right direction but it's a long way from fixing what is already broken."
Although leasehold generally applies to flats with shared spaces, developers - particularly in the North West and including Ellesmere Port - have been increasingly selling houses on these terms.
With 1.2m leasehold houses currently recorded in England and the number of leasehold sales rapidly growing, the Government says it is taking action to make future leases fairer.
Mr Javid said: “It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents. Enough is enough. These practices are unjust, unnecessary and need to stop.
“Our proposed changes will help make sure leasehold works in the best interests of home buyers now and in the future.”
Other measures, which are now subject to an eight week consultation, include:
Setting ground rents to zero levels; the Government says in recent years these have increased significantly, in some cases doubling every 10 years.
Closing legal loopholes to protect consumers, such as leaving some leaseholders vulnerable to possession orders.
Changing the rules on Help to Buy equity loans so the scheme can only be used to support new build houses on acceptable terms.
The Government also points out the terms of some leases are becoming increasingly onerous to those purchasing a leasehold flat or house who often find they need to pay thousands of pounds to their freeholder to make simple changes to their homes.
Recent cases include:
A homeowner being charged £1,500 by the company to make a small alteration to their home.
A family house that is now unsaleable because the ground rent is expected to hit £10,000 a year by 2060.
A homeowner who was told buying the lease would cost £2,000 but the bill came to £40,000.
Although ground rents are charged on all residential leasehold properties, the Government believes evidence shows they are becoming increasingly expensive. Under Westminster plans they could be reduced so that they relate to real costs incurred and are fair and transparent to the consumer.
The proposed prohibiting of future houses being sold as leasehold would apply to all houses apart from a few exceptional circumstances where leasehold is still needed such as houses that have shared services or built on land with specific restrictions.
Mr Madders said: “I am extremely pleased that some significant proposals are finally being produced to tackle abuses in the leasehold sector, which have brought misery to thousands of people. This has to be considered as a significant step in the right direction. Although it is a consultation at this stage, it is to be hoped that the house building lobby do not see this as an opportunity to put obstacles in the way of progress.
“Clearly there are question marks over how far this will go towards assisting people who have already bought their homes, face onerous ground rent clauses and have been quoted extortionate sums to buy their properties, obtain permission to alter the property, or even ask a question of their landlord.”
He continued: “What has occurred in this sector should be regarded as a national scandal. Once we have taken action to drive out these rotten practices, the ultimate aim must be to hold to account the men and women who must have known that creating this second lucrative income stream for developers would ultimately be at the cost of their customers.”
The consultation will run for eight weeks to mid September. The proposals relate to England only.
