Propertymark has urged the Sunak government to press ahead with leasehold reform ahead of the Second Reading of the Leasehold and Freehold Reform Bill in the House of Lords next week on March 27.
The Bill would make long-term changes to the residential leasehold property system in England and Wales.
The news comes as approximately 500 households, whose homes are owned by eight different companies, will be free from what the Competition and Markets Authority has dubbed as ‘problematic’ leaseholds, which witnessed the ground rent they paid double every ten to 15 years.
Back in 2018, Propertymark released Leasehold: A Life Sentence? which surveyed over 1,000 people who bought a leasehold house to explore the extent of the scandal which has left thousands of Brits trapped in leases with third parties. Then in 2023, Propertymark issued an updated Leasehold 2023 - Has Anything Changed? which discovered that 78 per cent of members agents found that they struggled to sell properties with escalating ground rents.
Furthermore, the study found that 72 per cent of member agents believed that further restricting ground rents was the best way forward, with capping current rents being supported by 55 per cent of respondents.
Regarding buyers, 60 per cent of them request information about the lease before they view a property, but 54 per cent of agents who sell property on behalf of developers state they do not always issue the pertinent leasehold information.
Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “It’s vital that the UK Government considers a ground rent ban as part of the Leasehold and Freehold Reform Bill. There are many steps policymakers can take to simplify leasehold such as making enfranchisement easier, the lease extension process being simplified, and freeholders joining a redress scheme where there is no managing agent.
“Furthermore, developers are not expected to abide by any current minimum standards to work in the property sector and there are no statutory rules to guarantee that those buying and selling leasehold property are appropriately qualified, which must also form part of the legislation to provide great protections for consumers.”
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I can see why flats are leasehold, the same as I can see why they pay a management charge each month for the upkeep and maintenance of the outside/communal areas. But sometimes I think that it is just a money-gouging exercise, a game of 'how much can we get away with?' and that should not be allowed. At one point I was paying more in management than I was for my mortgage, and that wasn't even on a shared ownership!
Ground rent should be a token gesture, and not more than a certain amount worked out on the same formula for each property. Say there are 10 flats, each with 2 bedrooms. Have a minimum room size (6ft x 8ft or something) and you cannot charge more than there are bedrooms of that size in the building, so in the example above, not more than £20 per year.
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