Leaseholders in England being exploited

Fri, 07 Apr 2017

Leaseholders in England being exploited
New government estimates show that around four million homeowners in England do not own the freehold to their own properties.

Labour says these leaseholders are currently "unprotected" from "rip-off rises in 'ground rents' from developers or management companies".

The government has announced their plans to help the crisis, with intentions to end leaseholds for new housing developments.

There are also plans to introduce a minimum lease length for new flats, as well as the advent of new laws to help leaseholders in tribunals against unreasonable ground rent reviews.

Currently, leaseholders own their homes for a fixed period of time, and will typically pay ground rent to the freeholder. Unfortunately, leaseholders can be exploited through clauses which allow for exponential increases in the fees. These increases come on top of management charges for the upkeep of communal areas and can lead to leaseholders struggling financially.

At the time of writing, around 21 per cent of private housing in England is owned by leaseholders.

Housing spokesman John Healey said: "These new figures confirm for the first time the scale of leasehold ownership in England.

"At its worst this is little better than legalised extortion and too many leaseholders are having to pay hefty bills as a result."

A DCLG spokesman said it was "unacceptable" that homebuyers were "being exploited with unfair charges and unfavourable ground rent agreements".

"Our recent White Paper made clear that we will take action to tackle all unfair and unreasonable abuses of leasehold," the spokesman added.

"This includes a consultation on ending leaseholds for new houses and we will announce more details shortly."

Labour attempted to deal with the issue when it was in government through legislation in 2002, with limited results.

Mr Healey added: "This is unfinished business for Labour - we gave leaseholders more protection in government, but the continuing problem now means we must do more.

"A Labour government would give leaseholders security from 'rip-off ground rents' and end the routine use of leasehold ownership in new housing developments."
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