I’m pleased the government is taking action against the ridiculous practices surrounding leaseholds, following the Competition and Markets Authority findings.
The CMA is now completing the legal work to launch direct enforcement action against companies like housebuilders that it believes have broken consumer protection law – and I’m looking forward to seeing how far this goes.
The industry has been talking about some of the spurious practices that go on for some time.
These include the escalation of ground rents, which can double every 10 years; a lack of transparency around what leaseholds mean; the excessive and disproportionate fees charged for maintaining buildings; and the higher than indicated cost of converting a leasehold to a freehold.
Buying a property is expensive enough without being laboured with extra costs you never anticipated.
I’m sure news of a crackdown is music to people’s ears who feel they’ve been misled, especially if they’re struggling to sell their property due to steep ground rents.
I only hope that people are compensated monetarily.
I’d also like to see contracts torn up where ground rents escalate at a ridiculous rate.
So far the government has focused on preventing new build homes from being sold as leasehold in future, while it has also proposed a cap on ground rents.
Having stock that people can’t sell is not only bad for the leaseholder, it means there’s less property on the market for potential buyers.
It’s not good for anyone other than the housebuilder and the freeholder.
I disagree with the concept of housebuilders selling the freehold to investors altogether – housebuilders are making enough cash in our property-starved market without looking to squeeze out more from homeowners.
And call me a traditionalist, but when you buy a property it should be yours – you shouldn’t have to pay shadowy figures arbitrarily large sums of money.
I realise that both freeholds and leaseholds have a place in the market, and maybe there’s a need not to throw out the baby with the bathwater – but it’s only right these shady practices are found and eliminated.
Ryan Bembridge, Editor, PropertyWire
