New industry pledge to protect leaseholders from ‘onerous’ fees

A new industry pledge to prevent leaseholders being trapped in unfair and costly deals has been unveiled by Communities Secretary James Brokenshire.

More than 40 property developers and freeholders, including well-known names such as Taylor Wimpey and Barratt Homes, have already signed the Government-backed pledge, which commits them to doing away with “doubling clauses” that can result in ground rents soaring over a short period.

The freeholders who have signed have committed to changing the terms of leases for those who are affected, the Government said.

Other industry bodies such as managing agents have also put their names down, vowing to act fairly and transparently in their dealings with leaseholders.

Ministers also plan to look at options to stop tenants picking up the tab for “unjustified” legal costs.

Under current rules, leaseholders who wish to take their landlords to court to challenge fees or unfair hikes in annual charges also run the risk of being forced to pay their landlord’s legal fees, the Government said.

This applies even if the court rules in their favour – hitting some tenants with bills of tens of thousands of pounds.

Mr Brokenshire said: “Since becoming Communities Secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market.

“The new industry pledge – signed by leading freeholders and property developers – will further support existing and future leaseholders by protecting them from onerous fees.

“It’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge, and I want to see others who have not yet signed up do the right thing.”

Housing Minister Heather Wheeler said: “We want to make sure we have a leasehold system where people are able to challenge exorbitant rates and high service charges.

“It is unacceptable that the burden of legal fees – potentially running into tens of thousands of pounds – is preventing people from seeking justice.

“The plans announced today will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone.”

Stewart Baseley, executive chairman of the Home Builders Federation, said: “The home building industry is committed to ensuring that leasehold is used appropriately and remains a safe and secure tenure for homeowners.

“This pledge is a further demonstration of the industry’s intent to provide home buyers with clarity, transparency and security ensuring that when used, the terms and conditions of leases are fair and proportionate.”