Call for your free quote 0800 955 0058

Leasehold banned on all new-build houses by government

The government takes action to ban the sale of all new-build properties as leasehold to return fairness for the housing market.

Developers of new-build properties are set to be banned by the government from selling homes as leasehold and ground rents will be reduced to zero to the benefit of first time buyers and home movers.

Leasehold is common for a block of flats where you own the property but not the land as residents live on multiple floors, however, it is not logical for a house on a plot of land.

The move is to tackle unfair leasehold practices and prevent future homeowners from being trapped in exploitative arrangements with all new houses using Help to Buy scheme to be sold on a freehold basis.

Existing homeowners with soaring ground rents that can double every ten years are not covered by the ban, however, the Competition and Markets Authority (CMA) are investigating potential unfair practices.

For home movers of leasehold houses wanting to trade up to a larger property, many have been unable to sell as buyers are unwilling to accept the high service charges and ground rents that could double in 10 years.

Sales of leasehold house reduce

Communities Secretary Rt Hon James Brokenshire MP said, we have long recognised that we have a responsibility to confront unfairness in the leasehold market and last year we consulted on proposals including the leasehold house ban and ground rent reduction.

Today I can confirm we will go ahead with our original plan to reduce ground rents on future leases to zero, as opposed to a cap of £10 per year, he says.

The threat of government proposals has already had a fundamental impact on the sale of new houses with leasehold reducing from 11% of the housing market to just 2% this year.

Leaseholders of houses has seen ground rents rising significantly, higher service charges and excessive administration fees for the repairs undertaken.

Homeowners with leasehold houses and unfair ground rents may find it impossible to sell and remortgage buyers will have to stay in their existing home.

For older equity release buyers leasehold flats are acceptable where the lease remaining is about 160 years less the youngest borrowers age to access wealth to repay an interest only mortgage or even pay for care at home.

To provide leaseholders with the vital information they need to sell their home, ministers will introduce a new time limit of 15 working days and a maximum fee of £200 to make the home buying process quicker, easier and cheaper.

For Help to Buy the Secretary of State has also instructed Homes England to renegotiate contracts to avoid selling new leasehold houses protecting home buyers from unscrupulous charges.

For buy-to-let landlords with leasehold houses, they would have to charge higher rents to cover additional costs which could mean their property could be less competitive in the rental market.

Competition watchdog to investigate sales

Many home buyers own houses as leaseholders and granted the right to live in their property for an agreed period typically between 99 and 125 years.

The Competition and Markets Authority (CMA) is to investigate two main areas including the potential for mis-selling and unfair contracts terms operated by freeholders and managing agents.

In terms of mis-selling the CMA are focused on whether the buyers of leasehold property received the information they needed and understood the obligations of the arrangement.

The other part of the investigation is concerned with unfair contracts terms where the costs of the services and rents are deemed as being excessive.

George Lusty senior director for consumer enforcement said, buying a home is one of the most expensive and important purchases a person can make.

So it’s essential they fully understand the contract they are signing including whether they will have to pay more than they bargained for.

Our investigation will shed light on potential misleading practices and unfair terms to help better protect people buying a home in future, he says.

What are your next steps?

Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or a buy-to-let investor.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage costs calculator and equity release mortgage calculator.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays of a lifetime or even pay university fees for grandchildren.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%
1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%

The latest mortgage news

25 Jun 2021

Seaside towns in Britain with house prices up 10pc due to strong demand

Demand for coastal living has seen house prices in Britain’s seaside towns rise 10% over the year as homeowners change their lifestyle.

24 Jun 2021

House prices at record levels with lack of property choice for buyers

Supply of properties on the market and available to buyers is an all-time low at the same time house prices are at record levels.

11 Jun 2021

Prices for house sales are rising four times faster than flats

Strong demand for houses has driven price growth up 5.2% in the last year which is over four times more than the 1.1% growth for flats.

28 May 2021

Fixed rate mortgage deals fall to under 1pc as lenders compete for borrowers

Fixed rate mortgages are cut to 0.99% for borrowers with large deposits looking to remortgage as competition increases from lenders.

Call for your free quote 0800 955 0058


    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.


    9th Floor, 30 Crown Place
    London, EC2A 4EB

    0800 955 0058


    London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.

    2021 © London City Mortgages.
    Website designed & developed by Spyre Media