The UK Government has committed substantial investment to ensure a greater transparency in residential property leasehold tenure and make it less biased and onerous.
It is offering funding to LEASE, a service that provides free support and advice to leaseholders and industry professionals at a time when leasehold tenures are set to become more common.
Reports have pointed out that newly built homes in the UK are being left unsaleable after catching house buyers in a leasehold property trap, with owners being asked to fork out five figure sums for freeholds after the developer passes it on to equity management and administration companies who then increase ground rents over a number of years.
Major builder Taylor Wimpey recently announced that it will stop building leasehold properties after headlines revealed that once sold on the ground rents were being increased substantially.
According to Government figures, around 6,000 new houses were sold as leasehold last year. And an analysis by leasehold reform organisation the Leasehold Knowledge Partnership shows that almost £2 billion worth of new build leasehold homes were sold in England and Wales in 2015.
Housing and Planning Minister Gavin Barwell confirmed the funding at the Leasehold Annual Conference in London in a bid to help the leasehold sector become more transparent, fairer and unbiased system.
‘Millions of people own leasehold homes and I am determined to stamp out unfair, unjust and unacceptable abuse of the leasehold system. I want to see transparency and fairness for leaseholders and I am pleased to announce ongoing support for LEASE, who provide free, valuable advice for existing and prospective leaseholders,’ Barwell said.
Tony Essien chief executive officer of LEASE said that it will help to lead the way for even better working practices for everyone involved, right from the start of the home buying process.
Discussions at the LEASE event suggest that leasehold tenure is set to considerably increase this year as the Government aims to increase the number of new homes built in order to meet the demands of the current housing shortage in the UK.
Land Registry figures show that leasehold made up 43% of all new build registrations in England and Wales in 2015, compared with 22% in 1996. As many as 9,000 new homes last year were built and sold under leasehold tenure.
‘With an increase in leasehold properties expected, it is essential that this type of tenure becomes more widely understood. Naturally, many buyers can get so caught up in the excitement of buying their new home, and they may fail to look or understand the terms of the leasehold,’ Essien explained.
‘England’s leasehold system is unique, so it is vitally important that buyers understand what they are purchasing so that their financial investment is protected in the future. We look forward to the outcome of the forthcoming Housing White Paper and to help play a part in the future of leasehold tenure,’ he added.
