Q. I recently reserved a brand new house from a developer and it should complete in the spring. I particularly decided on a house as I am currently in a Leasehold flat and the service charge and ground rent are extortionate. However I have just heard that the house is subject to ground rent charges?! I am shocked to hear this and had no idea that a regular new build house could be subject to such charges, is this legal?
A. For as long as I can remember new houses have always been freehold, true there are a few that are maybe located within a gated development with luxury facilities such as 24 hour concierge and luxury leisure facilities that are naturally subject to these charges but the regular house -definitely not. The Government however flagged this new trend that seems to be fairly prevalent amongst new build houses and recently announced that the majority of new build houses will be sold as Freeholds in a move to tackle unfair practice in the Leasehold sector and bringing an end to unjustified selling of new houses as Leasehold. The new consultation is also going to propose that ground rents on new leases are capped at £10.00. Unfair ground rents can turn a homeowners dream into a nightmare by hitting them with this unexpected charge you didn’t budget for and definitely not what you thought you signed up. Purchasing a home like this can also make it potentially difficult to sell the property in the future, given most buyers would also not want to be stuck with such extra charges. Considering some Leaseholders are now paying up to £700.00 per annum in ground rent this move is seriously needed. Hopefully given you are not completing on the property until the spring by that time these new government rules should be in place and protect you from being subject to such charges, regardless the government is taking this seriously and it looks like any hefty ground rent charges for houses will be short lived with the token £10 ground rent being introduced for new leases, so even if you do find you are left with no choice but to pay them initially this will get changed when the new legislation comes in to a reasonable amount.