Consultation on Tackling Unfair Practices in the Leasehold Housing Market

The government is considering introducing measures to tackle unfair practices in the housing market. The possible measures being considered are:

1)Limiting the sale of new leasehold houses - This has become a means by some developers of generating additional income through the charging of ground rents and the separate sale of the freehold interest. This can result in significant additional cost to the leaseholder including paying increasing ground rents, fees for obtaining consent from the freeholder to proposed alterations to the property, and the cost of extending the lease or buying the freehold at a later date.

2)Limiting the amount of ground rent which can be charged on new residential leases - This proposed change has been triggered by some developers imposing onerous ground rents with frequent rent reviews, sometimes doubling every decade. This can cause difficulties in selling or re-mortgaging. The imposition of a peppercorn rent is being considered.

3)Exempting leases where the annual ground rent exceeds £1000 in London (£250 elsewhere in England) from Ground 8 possession orders so that leaseholders of leases over 21 years cannot be evicted and lose their lease based on unpaid ground rent.  

4)Another change being considered by the Department for Communities and Local Government (DCLG) is giving freeholders of houses on private estates the right to challenge the reasonableness of estate service charges through the first-tier Property Chamber. It is becoming increasingly common for the owners of freehold properties to be obliged to pay for the maintenance of communal areas and facilities, such as private roads and play areas, but it is difficult for such charges to be challenged. The proposed change would put such owners in the same position as leaseholders, making it easier and cheaper for them to challenge unreasonable estate service charges. The DCLG is seeking views on the above points from anyone with an interest in the area. Responses can be made by email to LeaseholdHousesConsultation@communities.gsi.gov.uk  or online at www.surveymonkey.co.uk/r/leaseholdhouses The consultation closes at midnight on 19 September 2017. 

Lorraine Rose

Solicitor

Irwin Mitchell LLP