New Land Registry data paints an unsettling picture of developers who have benefited greatly from the Government’s Help To Buy scheme with developers cashing in on ‘abusive’ leasehold homes as prices surge 16 times faster than freeholds ahead of a looming Government ban.
So far this year, the price of leasehold new build houses has risen an astonishing 11.7% on last year. By contrast, the cost of freehold properties is up just 0.7% on 2017.
The average sold price of a new leasehold house rose from £251,252 to £280,641 this year, while new freehold houses — excluding flats and maisonettes for which leases are much more appropriate — rose from £310,292 to £312,560.
The alarming research comes nearly a year after the Government announced plans to outlaw the sale of new build leasehold houses altogether in December.
Land Registry statistical reports have been masking this trend because they don’t separate leasehold from freehold. The last UK HPI data shows that new build homes had seen year-on-year growth of 7.7%.
Leasehold sales have become commonplace in recent years, with developers standing accused of selling leases so they can eventually hike leasehold charges and leave homeowners vulnerable to exploitation.
Former Housing Minister Sajid Javid said at the time that the practice was “unfair and abusive”, adding "It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.”
James Newbery, property expert and Investment Manager at British Pearl, commented: “Britain’s first-time buyers are already hampered by a chronic lack of housing stock, so for property vultures to take advantage is unforgivable.
Help To Buy is probably partly to blame, with developers leaping to milk these taxpayer subsidised loans for all they’re worth. They simply jack up the prices of existing stock — knowing buyers facing stiff competition and are capable of paying more.
This stores up problems for the future but it may be years before homeowners realise they were taken for a ride. The Government needs to legislate as a matter of urgency and ban the sale of houses with leases to protect buyers.”
