Calling time on new-build leaseholds

blueprint plans

If your property is leasehold, you own the property but not the land it is built on, whereas if it is freehold, you own the property and the land it is built on.

Traditionally, flats and apartments were sold on a leasehold basis, meaning that if you bought a flat you were liable to pay ground rent and sometimes an annual service charge to a landlord or estate management company, while houses were nearly always freehold properties. In recent years, house builders have been selling some new build houses as leaseholds, allowing landlords to charge ground rent and, if they wish, increase the cost of buying the freehold at a later date. This has trapped homeowners in an unfair and exploitative position, making re-sale of their property difficult.

In June this year, the Ministry of Housing, Communities and Local Government announced plans to abolish selling new houses as leasehold properties and to reduce ground rents to zero.


In the statement, in addition to all new houses being sold on a freehold basis, it was confirmed that householders who have already been sold their new house as a leasehold will be able to get the freehold at no extra cost. Following on from this intervention, 60 developers have signed a pledge committing them to freeing existing leaseholders.


The government’s Help to Buy: Equity Loan scheme lends 20% of the value of a new-build home as long as the purchaser is able to put up a 5% deposit. Homes England, the government organisation responsible for increasing the number of new homes built in England, has been instructed by the government to renegotiate contracts with Help to Buy property developers to ensure that no new Help to Buy houses are sold as leasehold.