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Brokenshire proposes tight limits on leasehold

Housing secretary James Brokenshire has announced a consultation on plans which will see the majority of new homes sold as freehold and cap new leases to just £10.

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The proposals introduced by the Ministry for Housing Communities and Local Government (MHCLG) have been designed to stop the practice of housebuilder’s selling homes under leases and charging new owners exorbitant rents.
The government’s estimates that on average leaseholders pay over £300 ground rent each year, with some paying as much as £700. If the new cap comes into force the fees are expected to be reduced to a nominal £10.

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According to the MHCLG, the consultation will also seek views on what are the appropriate and fair exemptions, such as shared ownership properties and community led housing.
Commenting on the plans Mr Brokenshire said: "The government is committed to making the economy work for everyone by helping people with the cost of living.
"Unfair ground rents can turn a homeowner’s dream into a nightmare by hitting them in the back pocket, and making their property harder to sell.
"That’s why I’m taking concrete action to protect homeowners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds.”
The leasehold scandal saw thousands of people who had bought homes find themselves paying extra costs to cover increases in the ground rent, which is a nominal rent paid to the freeholder, on the property. A number of other charges were also uncovered.
According to campaign group Leasehold Knowledge Partnership up to 100,000 homebuyers were affected by onerous clauses in their contracts.
A number of major housebuilders including Taylor Wimpey were forced to pay compensation to homeowners who paid onerous grounds rents. In November last year Taylor Wimpey set aside £130m to cover leasehold claims.
A number of banks also refused to approve mortgage applications for the homes due to the problems posed by increasing ground rents.
The government had initially announced plans to stem the practice in late 2017.
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