I suspect the large number of issues around leasehold housing transactions will continue to be a key subject for political debate with plans formulated for how it is regulated and approached in the future.
Lenders reacting
As you might have seen recently, Nationwide has become one of the first lenders to announce a series of lending policy changes around new-build leasehold properties.
It made changes with the aim of protecting “its mortgage members from onerous leasehold terms and escalating ground rents”.
It has upped minimum acceptable lease terms for new-build transactions to 125 years for flats and 250 years for houses, plus its maximum acceptable ground rent is limited to 0.1% of the property’s value.
Both ground rent and other event fees must also be reasonable throughout the term of the lease, which effectively means that the practice of doubling such rents and fees every five, 10 or 15 years is now not acceptable to the building society.
Leasehold review
All in all, it is a very positive step from the building society and goes a long way to addressing a number of the concerns and issues that have been raised.
We might expect other lenders to follow Nationwide and the four building societies that had previously reviewed this area to state limitations on initial term and rent reviews.
However, it is our view – and that of many within the legal profession – that the whole issue of leasehold and the impact it can have on homeowners needs to be reviewed, with a plan formulated to address the many problems endemic within the system.
The Conveyancing Association’s own focus has been on the cost and delay that comes via the lease administrators.
Extensive profit
Many administrators seem to use their position to secure extensive profit, while at the same time causing significant delay to a leasehold transaction when parties attempt to get information from them.
Why else would we see such things as the requirement for Deeds of Covenant and Certificates of Compliance when both the burden and benefit of covenants runs with leasehold land?
Such issues need addressing and this is why our legal sector group is urging political parties who might form the next government, to commit to identifying and addressing the abuses and injustices impacting leasehold homeowners.
Having been around the legal sector for many years, it’s quite rare to have such a consensus and to have so many stakeholders and vested interests all of the same opinion.
Barwell promise
At the end of last year, then housing minister Gavin Barwell committed to a full review of leasehold, and it’s very important this promise is kept regardless of who fills the post in mid-June.
Action is undoubtedly required across the entire leasehold piece, and while the market can make great strides itself, it is going to require political will and action to get there.
We do find ourselves in a holding pattern at present when it comes to the political push that’s required, however we will continue to press for leasehold reform as the benefits to all those in the housing market should appear plain to see.
Even to politicians.
