The government says its funding schemes such as Help To Buy will no longer be applied to what it calls “unjustified new leasehold houses.”
The move has been announced by Housing Secretary James Brokenshire MP in a bid to create what he describes as “a fairer, more transparent system for homebuyers.”
At this stage there appears to be no firm definition on what is classed as an unjustified leasehold property, but the suggestion dovetails with criticisms in the past year of developers who have built new houses with a leasehold status.
The government is already working to initiatives to help leaseholders to buy-out their freehold and to improve information available about redress for those consumers who face the most onerous terms.
The government has also said changes will be made so that ground rents on new long leases – for both houses and flats – are set to zero.
Now Brokenshire says: “We have seen leaseholders in new-build homes facing unexpected costs rising every year that bear no relation to services and that’s not fair. So from now on any new government funding scheme will contain the condition that the money cannot support the unjustified use of leasehold for new homes.”
The announcement came with a number of other initiatives from the Ministry of Housing, Communities and Local Government, including the much-publicised proposal for three-year minimum tenancy terms, with a six-month break clause.
A £100 million Community Housing Fund has also been revealed to deliver affordable housing tailored to local needs.