Housebuilders were hit hard this morning after the government revealed new rules cracking down on leasehold practices described by communities secretary Sajid Javid as "feudal".
Shares in FTSE 250-listed McCarty & Stone, which specialises in retirement homes, fell 10.3 per cent to 152.3p on the news.
|FTSE 100||FTSE 250|
|Berkeley Group||-1.5%||McCarthy & Stone||-10.3%|
|Barratt Developments||-1%||Crest Nicholson||-0.2%|
Under the new rules, ground rents on new long-lease properties will be set to zero, while it will be easier for existing leaseholders to buy out their freeholds.
Javid said it was "unnacceptable" for home buyers to be forced into paying "unjustifiable" charges.
"Real action is needed to end these feudal practices," he added.
Javid began looking into the practices in July, after it emerged some housebuilders had inserted clauses into leasehold contracts meaning some ground rents doubled every 10 years, so that by the end of a 99-year lease, tenants would have paid 256 times the original ground rents.
But the housebuilding industry has hit back, saying the new rules will mean 20,000 fewer homes will be built across the UK each year, while the cost of new homes will rise by between five and 10 per cent.