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TODAY'S OTHER NEWS

Buyers 'taken for a ride' as new-build leasehold house prices soar

The cost of new-build leasehold properties has surged 16 times faster than freeholds according to research from property investment platform.

The revelation comes as the government has announced proposals - reported on Estate Agent Today over the weekend - to effectively ban developers from creating new-build houses, and to limit ground rents to a token £10 annually. 

The platform British Pearl, analysing Land Registry data, says the price of leasehold new build houses completed to the end of July 2018 has risen 11.7 per cent over last year. 

By contrast, the cost of freehold properties is up just 0.7 per cent on 2017.

The average sold price of a new leasehold house rose from £251,252 to £280,641 this year, while new freehold houses — excluding flats and maisonettes for which leases are much more appropriate — rose from £310,292 to £312,560.

The platform claims the Land Registry statistical reports mask this trend because they don’t separate leasehold from freehold.

“Britain’s first-time buyers are already hampered by a chronic lack of housing stock, so for property vultures to take advantage is unforgivable” claims British Pearl investment manager James Newbery.

“Help To Buy is probably partly to blame, with developers leaping to milk these taxpayer subsidised loans for all they’re worth. They simply jack up the prices of existing stock — knowing buyers facing stiff competition and are capable of paying more.

“This stores up problems for the future but it may be years before homeowners realise they were taken for a ride. The government needs to legislate as a matter of urgency and ban the sale of houses with leases to protect buyers.”

Details of the government’s announcement can be found here.

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    There is a reason why the housebuilder sector is one of the single biggest donors to the Conservative Party. They buy two things: 1) continuing strict rules on new development. This might sound counterintuitive but it is crucial to housebuilders because it means they can restrict the supply of new properties and keep inflating the value of their land banks. And 2) they buy ludicrous policies like taxpayer funding for their new home sales (laughably called "Help to Buy", when as everyone knows it should accurately be called "Help our Major Donors to Sell at Overinflated Prices and Get the Taxpayer to Fund It".

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