Almost as soon as the government yesterday made its latest announcement to outlaw rogue leasehold deals, the measure was branded “pathetic.
More than 40 property developers and freeholders, including Taylor Wimpey and Barratt Homes, have signed a government pledge committing them to doing away with onerous ‘doubling clauses’ that can result in ground rents soaring over a short period of time.
But leasehold reform campaigner Louie Burns, managing director of Leasehold Solutions, says: “This pledge is a pathetic attempt by the government to row back on its commitment to leasehold reform. Despite the promise that it would legislate to end abusive practices by freeholders, what they’ve actually done is put the very people responsible for exploiting leaseholders in charge of regulating themselves.”
Burns continues: “Let’s not forget that the property developers and freeholders who have signed this pledge were the architects of doubling ground rent clauses in the first place.
“They have made massive profits from their unsuspecting leasehold clients for years and it is absolutely laughable that they are now pretending they’ve had enough of freeholder abuses and want to protect leaseholders.”
The government insists that thefreeholders who have signed have committed to changing the terms of leases for those who are affected.
Other industry bodies such as managing agents have also put their names down, vowing to act fairly and transparently in their dealings with leaseholders.
Ministers have also announced plans to close legal loopholes that force leaseholders to pay high fees when they take their freeholders to court over service charges.
This includes consultation with industry on whether these changes should apply to existing leases too.
Under current rules, leaseholders who wish to take their landlords to court to challenge exorbitant fees or unfair hikes in annual charges also run the risk of being forced to pay their landlord’s legal fees.
This applies even if the court rules in their favour – hitting some tenants with bills of tens of thousands of pounds.
The government says that scrapping this loophole will reset the relationship between freeholders and leaseholders – stopping tenants being unfairly burdened with legal fees and ensuring they can access justice.
Housing minister Heather Wheeler says: “We want to make sure we have a leasehold system where people are able to challenge exorbitant rates and high service charges. It is unacceptable that the burden of legal fees – potentially running into tens of thousands of pounds – is preventing people from seeking justice. The plans announced will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone.”
The National Association of Estate Agents has welcomed the move, with chief executive Mark Hayward saying: “The government promised to ban the sale of new leasehold houses in 2017, but today’s pledge, backed by developers, is a triumph for those already tied into leases.
“It’s also positive that the retirement sector has been included in the government’s pledge. With event fees being reformed, older homeowners who have historically been stung with unfair charges when they become ill or die, will be treated fairly when they are at their most vulnerable.
“These measures are a huge step in the right direction towards fixing Britain’s broken housing market.”