Conservative Party politician, Sajid Javid pushes forward plans to end leaseholds on new build homes across England. 

Builders and landlords have been instructed by the British government to no longer sell new build homes under lease-holding. This comes after the Conservative politician Sajid Javid stated “It’s clear that far too many new houses are being built and sold as leaseholds, exploiting home buyers with unfair agreements and spiralling ground rents.”

“Enough is enough. These practices are unjust, unnecessary and need to stop. Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.” Javid also told BBC Radio 4’s Today programme that ground rent had been used by freeholders as “an unjustifiable way to print money”.

However, Javid said there were not as yet any definite government plans to compel builders to take action to assist those already affected.

“It’s an eight-week period of consultation to look at what action can be taken,” he said. “I don’t profess that I’ve got all the answers on this. I’ve identified a problem, we’ve come up with some potential solutions. We don’t pretend they’re easy, there are are complex matters here.”

Unfortunately, as the government plan to ban lease-holding on new build properties, there are said to be 100,000 homebuyers trapped in contracts with increasing ground rents.

What is lease-holding?

Lease-holding has been around for hundreds of years and was first introduced in 11th century. When a house is sold as lease-hold the buyer is only a tenant with a very long term rental, with the ground the home is built on remaining in the hands of the freeholder. The home buyer has to pay an annual “ground rent” to the freeholder, and has to ask the freeholder for consent if they want to make any changes to the property, such as building a conservatory or changing the windows. When the lease ends, ownership returns to the freeholder unless the person can extend the lease.

What is a freeholder?

A freeholder is the direct owner of the property, as well as the land that the property is built on. Freeholders are usually responsible for the repair and maintenance of the exterior and common parts of the building.

What is ground rent?

Ground rent is a regular payment to the freeholder of the property from the lease-holder, normally generating the freeholder a steady income.

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