Government to Address New-Build Ground Rent Problem
It came to light recently that the steep increases of ground rent for new-build homes in the UK was causing issues for buyers based on the property becoming basically unsaleable as a result, and the government has now confirmed that they will be doing more to help to prevent this problem.
It was a campaign by The Guardian that brought this issue to people’s attention as it was revealed that the face ground rents for new-build homes can often double every ten years, which boils down to the fact that these homes are being sold to buyers on a leasehold basis rather than freehold, resulting in the rising costs.
“We must make sure that the kind of abuses he mentioned are stamped out and we will continue to do everything we can” commented communities secretary Sajid Javid, in response to a question raised by MP Peter Bottomley. “We do work with a number of stakeholders and we can certainly see how we can do more.”
In some cases, the ground rent release clauses mean that a mortgage cannot be approved by lenders, and some companies who have been at fault for these problems have promised to review the situation after claiming to know nothing about the concerns of both customers and homeowners regarding these clauses.
When the government promised thousands of new homes, what wasn’t spoke about too much was the fact that half of these homes would be leasehold, meaning that the opportunity for these abuses that residents have been experiencing after moving into a new-build homes would have the potential to escalate even further in the future.
So what will the government do now? Homeowners have been promised action by the communities’ secretary Sajid Javid, but exactly how they are going to go about making these changes is yet to be seen, so we can only hope for improvements sooner rather than later.
Property & Development Magazine
