LONDON — The government is considering outlawing “unfair charges” levied on buyers of new-build houses in England.
Under the proposals, which are under public consultation, leaseholds on new-build houses would be banned.
Historically, most properties in England and Wales have been sold as freeholds, meaning the buyer owns the building outright as well as the land it sits on.
Under the leasehold system, leaseholders only own their home for a fixed period of time — typically for many decades — rather than owning the freehold on the property.
That means they have to pay ground rents to the freeholder, which is typically a building firm or investment company, and the Department for Communities and Local Government (DCLG) said the charges “were becoming increasingly onerous.”
It cited the example of a family home which is unsellable because the ground rent will reach £10,000 a year by 2060, and a homeowner who was told she could buy the freehold for £2,000 but was forced to pay £40,000.
Communities Secretary Sajid Javid said: “Enough is enough. These practices are unjust, unnecessary and need to stop.”
The proposals are subject to an eight-week consultation.
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