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Government kicks off consultation to tackle ‘unfair and unreasonable’ leasehold abuses

  • 25/07/2017
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Government kicks off consultation to tackle ‘unfair and unreasonable’ leasehold abuses
In a comprehensive bid to clampdown on rogue leasehold terms set by new home builders, the government has launched a consultation giving the industry two months to respond.

The paper: ‘Tackling unfair practices in the leasehold market’ is looking for responses on banning the sale of new-build leasehold houses, limiting ground rents and protecting leaseholders from repossession.

The consultation, which only applies to England, closes on 19 September at 11.45pm.

The paper seeks views on a raft of issues including excluding leaseholders from possession orders because of arrears of ground rent and views on freeholders being able to challenge service charges for mixed tenure estates with shared facilities.

The Sajid Javid MP, the Secretary of State for Communities and Local Government, said: “As a government committed to building a fairer society, I don’t see how we can look the other way while these practically feudal practices persist.”

The Conservative party manifesto, Forward Together, also committed to a “crack down on unfair practices in leasehold”. The government’s Housing White Paper Fixing our broken housing market, published in February, highlighted its aim to improve consumer choice and fairness in the leasehold sector.

The consultation considers banning the sale of new leasehold homes, with a few exceptions and possible changes to the Help to Buy Scheme in relation to leasehold houses. It is also offering questions on limiting the starting value and increase of ground rents on all new leases over 21 years, but is asking what retrospective changes can be made for current leaseholders.

The paper is also assessing the potential for updates to Ground 8 of the Housing Act 1988, as long leases over 21 years with an annual ground rent over £1,000 in London and £250 outside of London cannot be an Assured Tenancy.

The consultation may also provide freeholders on private estates with equivalent rights to leaseholders to challenge the reasonableness of service charges and other areas for future reform.

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