Housing minister slates leasehold system as ‘widespread problem’

Housing minister Gavin Barwell has called the current leasehold system a “widespread problem that needs addressing” during a debate in the House of Commons.

Speaking at the end of a wide-ranging debate on the Leasehold and Commonhold Reform Act of 2002, Barwell said: “[The Secretary of State and I] have been looking closely at the issues raised in recent weeks and I can tell the House that we are both absolutely determined to stamp out unfair, unjust and unacceptable abuse of the leasehold system.”

He highlighted the results of the National Leasehold Survey 2016, which showed that 57% of leaseholders agreed with the statement “I regret purchasing a leasehold property”.

Barwell said: “I most certainly do not feel comfortable with that level of concern right across the country…

“I am very keen to explore how we can promote greater transparency and fairness, and to work with all interested parties to improve leaseholders’ experience of home ownership.”

His call was echoed by Labour’s Ruth Cadbury, who promised that a Labour government would give leaseholders security from rip-off ground rents, end the routine use of leasehold as a tenure for new housing developments, and cap ground rent charges.

Louie Burns, managing director of leasehold enfranchisement specialists Leasehold Solutions, said: “It is fantastic to see that Parliament is waking up to the deplorable scandal of the UK’s feudal system of leasehold.

“We have been campaigning for years to raise the issue of leasehold on the political agenda and to educate flat owners about their rights.

 “I hope that the Government will work to bring about timely and meaningful changes to improve the lives of the UK’s 4.1m leaseholders.

“Abuse of the leasehold system is a growing problem: 43% of all new properties in 2016 were built as leasehold homes, so without urgent action, increasing numbers of flat owners will continue to be exploited for profit by unscrupulous freeholders.”

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3 Comments

  1. Anonymous Coward

    The leasehold system is fine.

    The problem is people.

    The CURRENT big problem is that some smart alec developers have decided to try and rinse every last penny out of their buyers, which is proper naughty.

    With the shortage of property and the preponderance of “sales people” in general (yes, I’m thinking of bankers too) this kind of thing was inevitable (with the benefit of hindsight of course…)

    You can imagine the meeting now:

    ACCOUNTANT: You’re not making as much NET profit as you used to, but it’s still a healthy 8% after tax, etc

    DEVELOPER:    That’s better than a lot of companies in the UK (except those b*stards at Rightmove – 73% profit, I wish I owned that one…)

    ACCOUNTANT: There are ways to improve the mid to long term profit and increase the value of your business to shareholders…

    DEVELOPER:    Really? How? I can’t possibly pay the contractors any less than we already do, and the local councils always demand more and more money from me!

    ACCOUNTANT:   Well, what we do is start with a nice low teaser ground rent and service charge, you know, a bit like 2 year fixed rate mortgages, and then POW, we hike the rate enormously and they can do nothing about it. If you set it up right, you’ll be laughing all the way to the bank!

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