Much publicity has been made of unfair leases drawn up on certain new build houses, the meat of which is the doubling of ground rent every 5 years. Nationwide has confronted this by announcing plans to introduce new requirements to help protect homeowners buying new-build leasehold properties.
Nationwide says they want to impose more transparent lending conditions on these troublesome homes. From the 11 May, they stated that loans on new-build leasehold properties would have to have leases of 125 years for flats and 250 years for houses. Ground rents must be equivalent to a maximum of .1% of the property value and must be ‘reasonable at all times during the lease term.’
Unreasonable clauses which allow the multiplying of ground rent such as doubling every five, ten or fifteen years, will not be allowed. Instead any increase in ground rent will have to be linked to a verified index, such as the Retail Price Index.
Although work is going on at legislation level much spoken of in the press, this is a good start. If all banks will not loan, with such leases being imposed on new buyers, pressure may be put on unscrupulous property developers to draw up leases which are not only fair but practical.