The Government must act for Leaseholders

Not building enough homes in the UK for many years made it very difficult to get onto the housing ladder, with buyers feeling they had to do whatever it takes to buy a home.

Developers decided they could make even more money selling new homes as leasehold – where you buy the property on a long lease of around 150 years, pay ground rent every year plus service charges for the upkeep of the roads on the estate and communal areas.  In recent years around half of the new houses built in High Peak were sold as leasehold.

These leases make home ownership considerably more expensive – ground rent on new homes is typically between £250 and £450 a year, and service charges often a similar amount.

There are often restrictions or fees to pay to make alterations to your home or garden.  Putting up a shed or satellite dish, planting a tree, or changing your fence can all be refused or a fee charged.  Leaseholders often say they don’t feel their home is really their own.

So they look to buy the freehold.  Homebuyers are often told the freehold will be available later at a reasonable price. Yet after they’ve bought their leasehold home, they are quoted an extortionate sum for the freehold, so they’re trapped.

I raised these problems in Parliament soon after I was elected. In late 2017 the Government promised to ban the sale of houses by leasehold and to make the system fairer for existing leaseholders.

Over a year later there’s been no action. The Housing Minister, South Derbyshire MP Heather Wheeler, has now told the Housing Select Committee the government will not change the law to help existing leaseholders.

Because one or two freeholders have offered their leaseholders better terms, the Minister said she would prefer to see voluntary agreements reached.  But we all know that very rich and powerful companies do not act to reduce their profits unless they have to.

The fact that the government said it would act was helpful.  After the statement, I visited one site in Chapel that was still selling houses on leasehold and asked them why they were still doing this. I’m pleased they changed to selling the homes freehold.

But existing leaseholders are still facing a high cost to purchase their freehold.  Prices quoted had come down in the fear of government announcing a set price.  But now that threat is lifted I worry they will rise again.

Leasehold houses are a licence to make money out of hard-working home-buyers.  I’ve written to the Housing Minister to make this clear and will continue to press government to act to act to end this rip-off practice.