Leasehold investors labelled ‘socially irresponsible’ as MPs gear up to get reform on the Government’s agenda

By Marc Shoffman

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Tory MP Sir Peter Bottomley has labelled investors in freeholds as “socially irresponsible” as he issued a warning that Parliament would turn its focus on them.

Speaking at the first meeting of the All Party Parliamentary Group on leasehold reform under the new Parliament, co-chairman Bottomley called on investors to put things right.

He said: “The people who have bought these freeholds from developers are in my view going to face significant parliamentary attention to ask how they could buy a freehold for £5,000 and a year or two later charge buyers increased terms to buy it back.

“It is unfair, social irresponsible and wrong.”

Speaking at the meeting, a representative from the Department for Communities and Local Government told MPs Brexit legislation was a more urgent priority but any work on leasehold reform would be as stated in the Housing White Paper and Queen’s Speech, which referred to improving transparency and fairness for leaseholders.

Bottomley responded that he would propose another debate in the chamber to ask the Government how proposals would be taken forward.

The meeting also heard from a representative from Jennifer Bourne of the Council of Mortgage Lenders (CML), now part of UK Finance, who warned that banks were conscious of the effect of onerous ground rent and leasehold terms that could hit home lending in the future.

A representative from Nationwide, Robert Stevens, urged other lenders to follow the building society’s lead by imposing minimum acceptable lease terms on first-time new build transactions of 125 years for flats and 250 years for houses. The lender also will only lend on new builds where the maximum acceptable starting ground rent is limited to 0.1%  of the property’s value.


The changes, announced in May, are limited to new applications on new build transactions and will not apply to properties being sold second hand.

http://www.propertyindustryeye.com/leasehold-investors-labelled-socially-irresponsible-as-mps-gear-up-to-get-reform-on-the-governments-agenda/