MPs are calling for far-reaching reform to leasehold property laws to make owning a home cheaper and fairer.
The Housing, Communities and Local Government Committee claim freeholders are abusing the leasehold property system by making charges that cannot be justified.
They want the government to cap current ground rents to 0.1% of the value of a home – up to a maximum £250 a year.
The committee also wants to set a zero ground rent on new leases, investigate mis-selling and change the law to make commonhold the standard tenancy for flats rather than leasehold.
MPs also want builders or estate agents to inform buyers of their rights before they purchase a home.
“We found that the leasehold system often fails to provide an effective system for managing multi-occupancy residential properties, and believe that a commonhold model would be more appropriate in most circumstances,” said committee chair Clive Betts.
“Buildings require effective management to ensure they are kept up to a sufficient standard of repair, but to spread responsibility for covering the costs. Yet in too many cases, leasehold has failed to do this, and acted primarily as means of providing a steady income for developers, freeholders or managing agents.”
The committee is calling for a host of other reforms to protect leaseholders, including new laws to ensure freeholders cannot recover legal costs through service charges when a leaseholder wins a case at a tribunal.
“In the worst cases, people have been left trapped in unsellable and unmortgageable homes, needing permission or having to pay high fees for even minor cosmetic changes,” said Letts.
“More common are opaque service charges and poor levels of maintenance, with no reasonable means for leaseholders to challenge or query how their buildings are managed. Financially, the buck always seems to stop with the leaseholders and there is little they can do about it.”
