Leaseholds will be axed for new houses in England, says Government

All new-build houses in England will sold on freehold basis unless there are exceptional circumstances – ending unscrupulous practice of unnecessary leaseholds, the Government has announced.

And tenants in the private rental sector could also be able to “passport” their existing deposit between landlords when moving from one property to the next – rather than needing to raise a second sum of cash.

Communities Secretary James Brokenshire confirmed plans to abolish the selling of new houses as leasehold properties.

He has also instructed Homes England to renegotiate Help to Buy contracts to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect new home buyers from unscrupulous charges.

People only own leasehold properties for a fixed period of time, and contracts may have certain conditions, for example when people want to make alterations to their home.

Concerns previously raised around leasehold properties include spiralling costs and buyers not being clear about what costs they will be responsible for.

The Government said the measures demonstrate its commitment to ensure decent and fair housing, as it strives to deliver 300,000 new homes a year by the mid-2020s.

Mr Brokenshire said in a speech at the Chartered Institute of Housing conference in Manchester: “We have long recognised that we have a responsibility to confront unfairness in the leasehold market.

“Last year we consulted on proposals including the leasehold house ban and ground rent reduction.

“Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year.”

He continued: “We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows, helping us delivery our promise to make the home buying and selling process quicker, cheaper and easier.”

As part of the plans to create a fairer housing market, ministers are inviting proposals to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next.

Dan Wilson Craw, director of Generation Rent, said deposit passporting could make a “huge difference” to hard-pressed renters.

He said: “When starting a new private tenancy, you’ll normally need to pay a security deposit worth around £1,000 on average, before you get the keys.

“If you’re already renting, you have that money already, but the catch is it’s tied up in a protection scheme until after you move, meaning you have to raid your savings.

“Instead, you should be able to transfer some of your existing deposit to your new tenancy, once you’ve paid your final month’s rent.”