Industry reacts to Government plans to ban leaseholds on new builds
By |Published On: 26th July 2017|

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Industry reacts to Government plans to ban leaseholds on new builds

By |Published On: 26th July 2017|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

Yesterday saw the Government outline plans to ban housebuilders from selling new build properties as leasehold in England, following outrage over contracts permitting property owners to pay fees for ordinary works.

Unsurprisingly, the move has been welcomed by a number of property investors and industry peers.

Leasehold Bans

Martin Bikhit, Managing Director of Kay & Co, observed: ‘We welcome the ban for leasehold fees on new build houses. High ground rents substantially increase the cost of a lease extension or the purchase of the freehold of a property, so this proposal will make things much fairer for buyers in the long run.’[1]

Despite the proposals being met with optimism by many, there is still confusion on the future of many existing leasehold homeowners.

It is expected that the Department for Communities and Local Government (DCLG) will consult on what measures it can take in order to support leaseholder facing onerous charges. These include spiralling ground rents.

A DCLG spokesperson said: ‘Under Government plans, ground rents could be reduced so that they relate to real costs incurred and are fair and transparent to the consumer.’[1]

Positive Step

Mark Farmer, Government advisor on construction CEO of property and construction consultancy Cast, said: ‘The government’s plan to ban leaseholds on new build houses in England is a step in the right direction for fixing our broken housing market.’

Industry reacts to Government plans to ban leaseholds

Industry reacts to Government plans to ban leaseholds on new builds

‘Leasehold agreements for houses and the subsequent ground rents that are charged, artificially distort a housing market that is already struggling with issues surrounding affordability. Banning developers from selling new-build houses on leasehold agreements to drive additional revenue may help recover some of the confidence that the public has lost in the sector.’

Mr Farmer went on to note: ‘Without action on this and the parallel housing quality debate there is a real risk of buyers starting to move away from new build stock which would be a disaster for housing supply.’[1]


Camilla Dell, Managing Partner at Black Brick, feels that the planned ban will give both protection and more certainty to buyers of new builds in the future.

Dell stated: ‘When purchasing any property, new build or not, with a long lease, the ground rent should always be peppercorn, but it does come down to the conveyancing process and for the buyers solicitor to carefully check the sales contract and ensure buyers interests are protected.’ [1]



About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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