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Archive for December, 2017

Leases on houses to be banned in England and so much more!

Faced with a housing crisis, the Government has consulted upon its intentions and issued a press release, dated 21 December 2017, stating it will ‘crackdown’ on what it sees as ‘unfair and abusive’ leasehold practices.  The proposed measures will relate to England only.  Will they make a difference?  Only time will tell.  It could, however, be some time before progress is made.  Legislative steps will need to be taken and the Government has said it will be consulting with the Law Commission.

Interestingly, the Law Commission’s latest programme was also issued at the end of 2017 without the emotive language used in the Government’s press release.  Amongst its proposals, it lists matters it will be addressing in the law on residential leasehold.  Its residential leasehold project will start by addressing three issues it says have been ‘identified as priority areas’ by the Department for Communities and Local Government i.e. commonhold, enfranchisement and regulation of managing agents.  Sadly, for the Government, these ‘priorities’ appear some was away from the list of items on which it intends to ‘crackdown’.

The Government has its guns pointed at the grant of leaseholds for ‘almost all’ new build houses - it intends to ‘ban’ them.  The Government press release states ‘changes will also be made so that ground rents on new long leases - both houses and flats - are set to zero”.  It is also to be made cheaper and easier for existing leaseholders to buy their freehold and support is to be given to leasehold owners when faced with onerous leasehold terms.

Whilst not common outside the UK, the sale of residential properties on long leasehold terms (rather than freehold) is frequently encountered in England.  Government statistics show there were 4.2 million residential leasehold dwellings in England in the private sector in 2015/6 with 1.4 million relating to leasehold houses.  Communities Secretary, Sajid Javid said “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.”  Those advising owners of historic buildings and estates are keeping an eye on what the Government means by ‘new-build’ - there are some people who fear the proposed new measures will apply to new leasehold interests regardless of when the property was built.  We wait to see.