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What Does the Leasehold Home Ban Mean?

In a bid to eliminate ‘feudal’ practices, the Government will impose a leasehold ban on almost all new build homes in the UK. 

It also intends to ensure that in England, ground rents are set to zero for new long leases in both flats and houses, and make it cheaper and simpler for freeholds to be bought out by their leaseholders. 

The Government announced these measure after receiving a strong response to its review of the leasehold system. Consultations began after complaints arose about ‘doubling’ ground rents, in which the leaseholder is required to pay double the sum to the freeholder every 10 or 25 years. Such properties have been impossible to sell, and lenders have been refusing to issue mortgages for them. 

Communities secretary Sajid Javid said that saddling homebuyers with punitive ground rent conditions, insupportable charges, and superfluous leaseholds was unacceptable. 

Mr. Javid said that the strong public response proved that these feudal practices needed to be brought to an end. He confirmed that the Government was taking measures to create a system that works for people. 

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More than 6,000 submissions were sent to the consultation, with most of them expressing concern about the leasehold system. 

The leasehold ban will not have a retrospective effective on the 1.4 million homes that currently have such an arrangement in place. According to Direct Line, the average ground rent is £371. 

The Government confirmed that the leasehold ban in new builds will not apply in some situations, such as when services are shared or the homes are built on land that have certain restrictions in place. A Housebuilders Federation spokesperson said that the proposals should have little effect on mainstream builders, measures should be taken to ensure that they make sense and don’t threaten the viability of specialist providers. 

Sebastian O'Kelly, a Leasehold Knowledge Partnership campaigner, said that the announcement was a great vindication of the group’s efforts against a government and civil service that appeared to be uninterested.

Mr. O’Kelly said that banning leasehold homes and setting new ground rents to zero were a positive step towards preventing developers from turning homes into majorly complicated investment resources for anonymous offshore investors. He pointed out that there were, unfortunately, millions of existing leasehold properties with varying lease terms and plenty of opportunity for lucrative games at the expense of homeowners. 

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