Leasehold campaigner slams government action as ‘incredibly weak’

Fears raised that offer to abolish ground rents for new leases leaves existing leaseholders in a worse position by creating a two-tier market.

Stonewater homes

Long time leasehold campaigner Louie Burns says newly announced government action against the practice is “incredibly weak”.

Burns, managing director of Leasehold Solutions, said the seemingly attractive offer to abolish ground rents for new leases actually left existing leaseholders in a worse position creating a two-tier market making new build properties with zero ground rents more attractive.

“While existing leaseholders will have less chance to sell their homes, as ground rents will still apply to their properties.

“Essentially developers have got off scot-free and, as usual, existing leaseholders will suffer the harshest consequences,” he said.

The new measures are in response to the government’s consultation in July on Tackling Unfair Practices in the Leasehold Market.

They include a ban on leaseholds for ‘almost all’ new build houses and changes to ensure that ground rents on new long leases – for both houses and flats – are set to zero.

In addition, the government has committed to working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease much easier, faster and cheaper.

The announcement also states that the sale of new build leasehold houses will be prohibited ‘except where necessary such as shared ownership

Burns said: We don’t agree that the sale of shared ownership properties necessitates the continuation of leasehold and that other forms of ownership, such as commonhold, would be preferable.

“Unfortunately the government’s announcement makes no mention of commonhold as a viable alternative that is under consideration.

Nor does Burns see the new measures addressing ‘flawed’ valuation models used to calculate the cost of lease extensions and freehold acquisitions.

To Burns these ‘clearly favour’ the interests of freeholders and cause distress and financial hardship for many leaseholders.

“Leasehold reform can only be effective if a fair and transparent valuation system is imposed.

“While we welcome the government’s commitment to support existing leaseholders by working with the Law Commission, in reality the Commission’s project to review Unfair Terms in Residential Leasehold is years away from completion, so any positive benefits for leaseholders are a long way off,” he said.