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Leaseholds banned on new build homes
Graham_Devon
Posts: 58,560 Forumite
Can only say good in response to this one. I started a thread a while back showing how people using HTB had now found themselves stung by massive leasehold charges meaning they could not move.
http://www.bbc.co.uk/news/business-42439155
Builders have responded angrily, insisting they will simply reduce the number of houses they build as it becomes uneconomic for them to do so. However, others in the industry have accused them of crying wolf on the back of massive increases in profits each year and £100m bonus payouts for directors.
Glad to see something is being done. Hope those who fell foul of it find some way out. Just hope that it doesn't lead to another wheeze to trap housebuyers in "affordable homes".
People buying new-build houses in England will no longer be obliged to enter leasehold agreements, the government has announced.
Anyone buying a flat - or a house - on a lease of longer than 21 years will also not have to pay any ground rent.
Critics described the new measures as "incredibly weak".
The announcement follows revelations that thousands of people buying new homes have been subject to what the government called "feudal practices".
http://www.bbc.co.uk/news/business-42439155
Builders have responded angrily, insisting they will simply reduce the number of houses they build as it becomes uneconomic for them to do so. However, others in the industry have accused them of crying wolf on the back of massive increases in profits each year and £100m bonus payouts for directors.
Glad to see something is being done. Hope those who fell foul of it find some way out. Just hope that it doesn't lead to another wheeze to trap housebuyers in "affordable homes".
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Comments
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There is nothing wrong with leases and ground rents, even if they rising 10x every year!
What is wrong is buyers given bad advice by solicitors/surveyors and not making it clear to them what they are buying.
Ground rents is a means of financing much like a mortgage is. The buyer (in the ideal world) can buy the property cheaper then if the property were a freehold/share of freehold (with no GR). It makes perfect sense.
What really need to have happened is regulations around buyers making sure they get a solicitor and valuer who is independent from the developer. And the solicitor and valuer must meet minimum standards of both explaining what the buyer is buying and whether the buyer is being ripped off or not.
Fix the source of the issue!!!0 -
I'm all for choice in the market but even I think leaseholds are usually a stupid idea.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
I think leasehold is ok for flats in fact in the 70s I was refused a mortgaged on a freehold flat because it was freehold. But I don’t see any real reason why houses are leasehold.0
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Ground rents is a means of financing much like a mortgage is. The buyer (in the ideal world) can buy the property cheaper then if the property were a freehold/share of freehold (with no GR). It makes perfect sense.
There was some research done on this based on Land registry figures mentioned on the BBC news today.
Leaseholds are no cheaper than freeholds for new build homes.
It also appears to be getting increasingly difficult to buy new build homes from some developers without a leasehold, especially for the conventional starter home. I don't know what "increasingly" means though...whether it means 50% are leasehold or 90% are leasehold.0 -
Graham_Devon wrote: »There was some research done on this based on Land registry figures mentioned on the BBC news today.
Leaseholds are no cheaper than freeholds for new build homes.
It also appears to be getting increasingly difficult to buy new build homes from some developers without a leasehold, especially for the conventional starter home. I don't know what "increasingly" means though...whether it means 50% are leasehold or 90% are leasehold.
They are no cheaper because the buyer has gotten bad advice from their solicitor and/or surveyor. So they are overpaying in the first place.
From what i heard the solicitor/surveyor is usually recommended by the developer.... i wonder why??!!??!!
It should be pretty clear that a leasehold with a GR doubling every 10 years would have a pretty steep discount to a leasehold with a GR doubling every 25 years say.0 -
They are no cheaper because the buyer has gotten bad advice from their solicitor and/or surveyor. So they are overpaying in the first place.
From what i heard the solicitor/surveyor is usually recommended by the developer.... i wonder why??!!??!!
It should be pretty clear that a leasehold with a GR doubling every 10 years would have a pretty steep discount to a leasehold with a GR doubling every 25 years say.
Doesn't really matter who is at fault. The issue remains that the leasehold house is no different in price to the freehold house.... a point you did make.
Often though, they are made easier to finance via HTB or other schemes. So not cheaper per se, rather "easier" to buy via schemes.
The problem has only grown with Help to Buy. The scheme has seen an acceleration of builders, specifically Bellway and Taylor Wimpey selling the freehold to investment companies. These schemes DO force you to use the builders / HTB solicitor.
Even then, the solicitor can tell you what's true at the time. But if, say, as was the case, Bellway then sell the freehold without your knowledge, everything the solicitor did say is now out of the window.
See: http://www.bbc.co.uk/news/business-388276610 -
Graham_Devon wrote: »Doesn't really matter who is at fault. The issue remains that the leasehold house is no different in price to the freehold house. Often though, they are made easier to finance via HTB or other schemes. So not cheaper per se, rather "easier" to buy via schemes.
The problem has only grown with Help to Buy. The scheme has seen an acceleration of builders, specifically Bellway and Taylor Wimpey selling the freehold to investment companies. These schemes DO force you to use the builders / HTB solicitor.
See: http://www.bbc.co.uk/news/business-38827661
What do you mean by leasehold is no different in price to freehold? Can you explain this?
Why do these schemes force the buyer to use the developer solicitor? What about valuer? what surveys do the buyer normally ask for? Or is it just the standard bank valuation (which does not mean a thing in terms of true value)?0
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