All new-build houses will be sold on a freehold basis and ground rents on new flats will be slashed to zero, the government has confirmed.

Ministers said the moves would “put cash back into the pockets of future homeowners” and prevent them from being trapped in “exploitative arrangements”.

The announcement follows an official consultation held in the wake of widespread outrage about unfair abuses of the leasehold system. It was part of a package of measures unveiled on Thursday that also included proposals to make it easier for private tenants to transfer deposits directly between landlords when moving home.

There are about 4.2m residential leasehold properties in England, of which about 2.9m are flats, and the government first outlined plans for a clampdown in this area in July 2017.

This followed reports that tens of thousands of homebuyers had been saddled with spiralling ground rents which had in some cases left homes virtually unsaleable. Fees of up to £2,500 were demanded by some freeholders for permission to build an extension, and some homeowners have been asked for up to £35,000 to buy freeholds on recently built detached houses with long leaseholds.

James Brokenshire, the communities secretary, said the government was pushing ahead with axing leaseholds for all new houses, which would in future be sold as freehold unless there were “exceptional circumstances”.

Flats can continue to be sold as leasehold but ministers said they would reduce ground rents on future leases to zero, as opposed to an earlier proposal to cap them at a nominal £10 per year – down from the current average of about £300.

Meanwhile, to stop freeholders and managing agents taking as long as they want – and charging what they want – to provide leaseholders with the information they need to sell their home, ministers will introduce a new time limit of 15 working days and a maximum fee of £200.

The government said contracts relating to the help-to-buy scheme would be renegotiated to explicitly rule out the selling of new leasehold houses, other than in exceptional circumstances, to protect homebuyers from unscrupulous charges.

In addition, where buyers were incorrectly sold a leasehold home, consumers would be able to obtain their freehold outright at no extra cost.

However, it is not clear when the measures will formally take effect. Brokenshire said the government would be “pressing ahead as soon as parliamentary time allows”.

Meanwhile, ministers said that when some private tenants moved home, they found it a struggle to come up with a second deposit for their new landlord, so the government wanted to create a system that would allow someone’s deposit cash “to follow them from property to property”.

Article taken from The Guardian