Communities secretary Sajid Javid to crack down on leasehold abuse with "radical" proposals

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"Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.” (Source: Getty)

The government is to ban developers from selling new-build houses as leasehold and place restrictions around ground rent, in what it calls "radical" new proposals to tackle abuse of the system. 

Communities secretary Sajid Javid will today propose that developers will be prohibited from selling "all houses apart from a few exceptional circumstances" as leasehold. Exemptions include houses that have shared services or built on land with specific restrictions.

The government claims developers have increasingly been selling houses on these terms. There are 1.2m leasehold houses in England alone, and the number is "rapidly" rising, DCLG said.  

Javid, who is opening an eight-week consultation into the measure, also plans to fix ground rents to "zero levels" to prevent the figures spiralling without residents' control. The proposals require that they relate to real costs incurred, and are fair and transparent to the consumer.

He also plans to close legal loopholes that leave leaseholders vulnerable to possession orders; and changing the rules on Help to Buy Equity loans so that the scheme can only be used to support new build houses "on acceptable terms".

Javid will say: "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 homebuyers now and in the future.”