The number of leasehold houses in England is significantly higher than previously estimated, according to new government figures released before an expected ban on future sales by developers.
The Department for Communities and Local Government said there were 1.4m leasehold houses in England in 2015-16, compared with the previous estimate of 1.2m in 2014-15, following a change in methodology to include socially rented properties.
There are 2.9m leasehold flats, up from 2.8m previously. In total, nearly one in five of all properties in England are leasehold, partly because of the explosion of apartment building in cities, but also because of developers’ highly controversial shift to selling houses as leasehold.
Tens of thousands of homebuyers have also been caught by spiralling ground rents on leasehold properties, which have in some cases left homes virtually unsaleable.
In July the government proposed a complete ban on the sale of houses as leasehold in England, alongside restrictions on ground rents that could limit them to as low as zero.
Consultation on leasehold reforms closed this week. The proposals have provoked stiff opposition from developers but have been supported by a wide range of consumer and homebuyer groups.
The HomeOwners Alliance, which said in May that leasehold had become the number one concern for homebuyers, said ground rents on all new flats and houses should be cut to zero, and for existing contracts be limited to 0.1% of the value of the property. It said leaseholds should be entirely phased out over time.
“We welcome the government’s recognition of the injustices in the current system, and proposals to ban the sale of new-build leasehold houses. But we also need to deal urgently with those already caught in this scandal, by curbing extortionate ground rents,” it said.
“We believe the government should go much further, and set out a plan to abolish the leasehold system over time. There are no redeeming qualities to the leasehold system, which is so complex and confusing to the public that partial reforms will mean it will remain a vehicle for unscrupulous landlords and investment companies to unfairly make money from homeowners.”
However, an influential legal authority has urged the government to step back from a complete ban. The Civil Justice Council, chaired by the master of the rolls, Sir Terence Etherton, said prohibition should be a “last resort”.
The National Leasehold Campaign, which has thousands of members on Facebook who are victims of spiralling ground rents, said it was concerned that developers would switch from leasehold to “fleecehold”.
Jo Darbyshire of the campaign group said: “In anticipation of the outcome of the government’s consultation on leasehold reform big developers are now advertising homes as ’freehold’ but further examination shows that they sell the houses and land in two separate transactions with the transfer of the land containing exactly the same permission fees as the leases used to (eg charges to make home alterations, change mortgage lender, etc). We’ve termed this ’fleecehold’; it’s technically freehold as there is no lease and no ground rent, but has onerous permission fees.
“Those of us trapped in this leasehold nightmare and going through the enfranchisement process are finding that freeholders are refusing to remove permission fees as part of that process.”
The property industry is waiting to see how the communities secretary, Sajid Javid, responds to the consultation.
A DCLG spokesman said: “It’s unacceptable that homebuyers are being exploited with unjustifiable charges and onerous ground rent terms.
“Our housing white paper made clear that we would look at unreasonable abuses of leasehold. That is why we sought views through public consultation. The department is carefully considering the responses and we will respond in due course.”
Post supplied by the Guardian