Leasehold properties have been vilified in recent months as confused tenants accused residential property developers of mis-selling the homes as ‘virtual freeholds.’
Hundreds of developments have suffered from housing developers selling leasehold properties, only to then resell the land onto a third party management companies that are able to set exorbitant ground rents and charge home owners ridiculous amounts for the freehold title.
Now, James Brokenshire, Secretary of State for Housing, Communities and Local Government is set to audit and consider what property the Help to Buy finance is used to buy.
In particular, the Government are focusing on the Equity Loan Scheme. It may ban first time buyers (FTBs) from purchasing leasehold property using the scheme because of anxieties that the home buyers will imprison themselves in a quagmire of ground rent.
James Brokenshire, Secretary of State for Housing, Communities and Local Government, said: “We will reflect carefully on what we’re seeing in the market to ensure that as we look to a post-2021 position, and we’ve made no decisions over this as yet, as to what is needed to support that sense of home ownership, of first time buyers, of getting people onto the housing ladder, and what we need to do next to ensure that that vision of home ownership is felt by more people.
“It’s important that we do take action on some of the practices that we have seen, and I think the market has responded to the firm messages we’ve given, for example, over the use of leasehold houses.
“I just don’t think that leasehold is needed other than in exceptional circumstances and that practice needs to end.”
Whilst the Help to Buy finance is only secured until 2021, the Government’s careful consideration of the types of property open to the scheme may save many people from leasehold concerns in the future.
Will this restriction create a negative impact on the housing market? Are leasehold new builds being unjustly criticised? What will this mean for conveyancers?