A commercial property expert is warning housebuilders to take a look at their leases following news that the sale of new-build leasehold homes could be banned.
The Government’s Communities Secretary, Sajid Javid, has announced an eight-week consultation into the proposals, which could potentially ban the payment of ground rents on new homes.
But Martin Beardsworth, Commercial Property partner at Napthens, warned that while such plans could help homeowners in the future, it is also important for buyers to understand the current system and how leasehold works.
He said: “This is major news that could change the way properties are owned by many people.
“This comes after industry concerns that some house owners may not fully understand the terms of their new house leases, and onerous lease terms could affect the value of their property and/or cause mortgage lenders to revoke their initial mortgage offers.
“There is no doubt that the leasehold system can be complex, which is why it is so important to take legal advice early on.
“For instance, the Council of Mortgage Lenders (CML), suggests that lease information should be made available for new homes as early in the purchase process as possible so advisers can help purchasers make appropriate decisions.
“Lenders will also expect professional advisers to consider the length of the initial lease term, the initial ground rent figure, how this rent is reviewed and other fees charged under the lease.
“Until the consultation runs its course and the Government takes a decision on how best to move forward, it’s still important that housebuilders take the right advice early on when planning leases for their developments.”
For further information on this, please get in touch with a member of the Commercial Property team.