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September 21, 2017
3 minute read
Here at the Homeowners Alliance we have been vocal on the issue of leaseholds for some time now and after plenty of campaigning – including the publication of our Homes held Hostage report – it seems the government is finally starting to take notice. But will it go far enough?
During the summer communities secretary Sajid Javid announced plans to ban leasehold tenures for new build homes and opened a consultation on the matter. Responding to that consultation Homeowners Alliance is calling for Mr Javid and the government to go further.
In that response we state how we would like to see the government introduce a statutory cap on the annual ground rents that homeowners have to pay, to protect leaseholders from exploitation by unscrupulous freeholders.
The cap on the ground rent would be a share of the value of the property, which we suggest should be 0.1%. That means that a £200,000 property would face a maximum ground rent of £200 a year. The cap would prevent the homeowners being hit by the common practice of ground rents increasing or even doubling every few years, which have pushed many into financial hardship or made their properties unmarketable. The cap would mean probably hundreds of thousands of homeowners would be hundreds of pounds a year better off.
Furthermore we’re calling on the government to ban ground rents on all new leasehold properties and all lease extensions in England and Wales, as part of a public commitment to phase out the much-abused leasehold system. At present, only ground rents in formal leasehold extensions are legally required to be zero (or a “peppercorn” in legal parlance), but here at the HomeOwners Alliance we are calling for that requirement to be extended to all new leases and all lease extensions, including informal ones.
Paula Higgins, chief executive of HomeOwners Alliance, said: “Many homeowners have suffered outrageous exploitation by increasingly unscrupulous freeholders. We obviously welcome the fact that the government has accepted our proposal to ban the sale of leasehold houses. It is good the government is up for reform to end the injustice, but malpractice by freeholders is so widespread that the government needs to be prepared to be radical – the time for tinkering is over.”
In our consultation response we have also called on government to state its commitment to ending the leasehold system and ground rents, and to set out a plan to do that. In summary we recommend the following.
To protect those buying new build houses we want to see a:
To protect leaseholders already suffering onerous ground rents we recommend:
We also propose limiting ground rents on all new leases:
And a range of other reforms:
March 25, 2025 
