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James Brokenshire, communities secretary, has revealed a new industry pledge to stop leaseholders being trapped in unfair and costly deals.

Leading property developers and freeholders including Taylor Wimpey and Barratt Homes have signed this pledge, which commits them to the elimination of ‘doubling clauses’ that can result in ground rents rising exponentially over a short period of time.

The freeholders who have signed have committed to changing the terms of leases for those who are affected and industry bodies, such as managing agents, have also vowed to improve transparency and fairness when dealing with leaseholders.

Talk Property – MPU

Closing legal loopholes

Ministers have announced plans to close the legal loopholes that force leaseholders to pay unjustified fees when they take their freeholders to court over service charges. Currently, 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 move will also include consultation with the industry on whether these changes should apply to existing leases. Scrapping this loophole is hoped to improve relationships between freeholders and leaseholders, consequently stopping tenants from being unfairly burdened with legal fees and allowing them to more easily access justice.

An end to exploitative and unfair leaseholds

James Brokenshire commented: “Since becoming communities secretary, I have repeatedly made clear my ambition to end those exploitative and unfair leasehold arrangements that have no place in a modern housing market. The new industry pledge – signed by leading freeholders and property developers – will further support existing and future leaseholders by protecting them from onerous fees.”

Brokenshire also believes that it’s great news that leading names such as Taylor Wimpey and Barratt Developments have already signed up to the pledge. He added: “I want to see others who have not yet signed up to do the right thing.”

Heather Wheeler, housing minister said: “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 today will stop leaseholders from picking up the tab for unjustified legal costs – creating a housing market that truly works for everyone,” she added.

A positive change in the industry

Richard Silva, executive director at Long Harbour said: “This pledge is a crucial first step towards positive change in the residential leasehold market and it reflects our commitment to eliminating bad practice from the market. And to further protect leaseholders from excessive costs, older people and their families will be better-protected across the retirement sector from unfair fees – sometimes called ‘event fees’ – charged in some leasehold retirement properties, where owners are required to pay extra charges when they become ill or die.”

Silva also believes that these recently-announced measures will stop older homeowners and their families being hit with surprise fees when they may least expect and often when they are at their most vulnerable, such as following the illness or death of a loved one.

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Jim Kersey
Jim focuses on the socio-economic impact of housing. His reporting for Property Notify often touches on topics such as changes in sentiment among investors in various housing sectors, as well as the impact of various developments on the average person.

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