Leasehold houses to be banned

In recent years, many developers have sold houses on long leases which has come as a surprise to many homeowners.

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We have reported previously of the problems faced by people buying houses on a leasehold basis. Typically, a buyer would expect a house to be sold on a freehold basis. This means that the homeowner has an unlimited right to enjoy the property. However, in recent years, many developers have sold houses on long leases which has come as a surprise to many homeowners. A lease will often contain restrictions in relation to extending or altering a property. Another problem for homeowners is the amount of ground rent that they are asked to pay. These arrangements have often left homeowners unable to sell their property unless they spend a lot of money exercising their statutory right to acquire the freehold from the landlord.

The government has announced its intention to abolish these practices. It is proposed that all new houses will be sold on a freehold basis unless there are 'exceptional circumstances'. In addition, the government backed Help to Buy scheme is also being amended to change the criteria so that, generally, Help to Buy funds cannot be used for the purchase of a leasehold house.

In addition, the government proposes reducing ground rent on future leases to zero. As ever with government announcements, the impact of Brexit and the timing of any changes is unknown.

Recent research has shown that many homeowners do not understand the difference between purchasing a freehold and a leasehold property. It is important for any buyer to obtain clear independent advice from a specialist property lawyer.

To discuss this or any other property related matter, contact us.

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