How Will This Government Housing Announcement Affect You?

New build leasehold properties are to be banned but, once again, our politicians are barely scratching the surface of the housing crisis

How Will This Government Housing Announcement Affect You?

by Vicky Spratt |
Published on

This is your (final 2017) weekly instalment of WTF is going on because, these days, a lot can happen in a week…

There are no two ways about it: the housing crisis is one of the, if not the, most pressing issues facing our country. It’s a complex and messy web of problems that currently affects everyone in this country to a greater or lesser degree.

It’s not surprise, then, that the Government have closed the year by announcing something intended to salve if not solve the housing disaster we face as a country. Yesterday, the Secretary of State for Communities and Local Government, Sajid Javid, announced that he was banning leasehold on all new-build homes. As *The Debrief *reported earlier this year, the practice of freeholders charging extortionate ground rents on new build properties is widespread.

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There are currently 1.4 million leasehold houses across England but the number of leasehold sales is rapidly rising as more and more new build properties are put up to try and increase the number of homes available. If you buy a leasehold home you don’t actually own it forever, you own it for a fixed period of time and are effectively a tenant of the person who owns it outright.

This announcement is good (although whether it goes far enough remains to be seen), if somewhat long overdue news, and will end the positively feudal practice of unscrupulous property developers and freehold owners charging anyone who bought their home on a leasehold basis through the nose for the privilege of occupying space.

For prospective first-time buyers, this is a win and means that those buying new build properties from here on in are less likely to find themselves being stung by extortionate ground rents further down the line.

Kellie, 27, who recently bought a new build home on a leasehold basis from the developer Taylor Wimpey is pleased by the announcement. Her story is an example of why this move is necessary. Kellie was paying Taylor Wimpy ground rent of £260 a year before she received a letter telling her it was going to be increased because the freehold had been sold to a private company. She checked her lease and found that it stated that it could go up in the future but didn’t specify how much by. She bought her house in Surrey for £299,500 using the Help to Buy scheme with her boyfriend earlier this year. She says ‘if my ground rent goes up much more it would become unaffordable and we would have to sell and try to get a freehold or get a lodger to help us pay it.’ Is she worried? ‘yes, of course. There’s always something though isn’t there, but what can you can do is there? Money makes money…’

When it comes to Help to Buy properties, a spokesperson for the Department for Communities and Local Government told *The Debrief *that Sajid Javid ‘will be writing to all developers to strongly discourage the use of Help to Buy Equity loans for the purchase of leasehold houses’, they added that he will also be contacting those who already have customers who purchased a leasehold property using Help to Buy and asking them to ‘provide necessary redress’.

The Government’s announcement will stop this practice and ensure that first-time buyers like Kellie are protected in the future. They are also looking to help people like her who already find themselves caught between a rock and a greedy freeholder. The same Department for Communities and Local Government spokesperson explained to The Debrief ‘we are working with the Law Commission to support existing leaseholders, making the process of purchasing a freehold or extending a lease much easier, faster and cheaper’. They said that they ‘cannot and will not’ leave those already affected by this ‘without support’ and will make sure those charging people ‘onerous’ ground rents are held accountable.

As 2017 draws to a close it’s clear that the Government are trying to tackle the housing crisis, but equally clear that they are only scratching the surface. This year the Conservatives pumped another £10bn into the Help To Buy scheme which has been described by The Adam Smith Institute as ‘like pouring petrol on a bonfire’ because not only does the scheme only help those who can get a deposit together, it is propping up unreasonable house prices in an over inflated market.


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More than this, earlier in the week a damning report from the Public Accounts Committee condemned the Government over its ‘abject failure’ to tackle homelessness. This year the number of people sleeping rough as well as the number of homeless families has reached unprecedented levels: more than 9,000 people are sleeping rough in England at any one time which is up 134 per cent since 2011 and over 79,000 households, including 120,000 children are homeless and living in temporary accommodation, a figure which has risen by 65 per cent since 2010.

So, while it’s great that the Government are taking action on the scandal that is leasehold the growing housing disaster in this country is going nowhere. In fact, things are getting steadily worse. People are poorer for the Government's inertia and increasingly fed up. It’s going to take more than tinkering around to legislate things that should already be unlawful – like extortionate ground rent on leasehold property or banning letting agency fees – to help those who need it most.

You might also be interested in:

The New Way That First Time Buyers Are Being Screwed Over

1 in 3 Renters Are Getting Into Debt To Pay Their Rent

Renters Are Spending More And More Of Their Incomes On Rent

**Follow Vicky on Twitter **@Victoria_Spratt

This article originally appeared on The Debrief.

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