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England to ban the sale of new ‘leasehold’ houses

LONDON (Reuters) – Britain unveiled proposals on Tuesday to ban the sale of new leasehold houses which oblige the owner of the lease to pay ground rent to a freeholder, after concern some buyers are facing sharply increasing costs for years afterwards.

In Britain, apartments are mainly sold as leasehold whilst houses are generally sold as freehold.

But thousands of houses are now being sold as leasehold, which the government has criticised as partly an attempt for developers to boost their profits.

“Enough is enough. These practices are unjust, unnecessary and need to stop,” said communities minister Sajid Javid.

“Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future.”

The plans, which would apply in England, are part of Prime Minister Theresa May’s efforts to better regulate the property market where higher prices and charges such as letting fees have left many younger people unable to afford to buy a home.

Britain’s third biggest housebuilder Taylor Wimpey (TW.L) said earlier this year that it would reduce ground rent for the majority of owners who face a doubling of charges every 10 years for several decades.

The government launched a consultation on Tuesday into its plans, which include proposals to restrict ground rents to as low as zero and a change to equity loans provided under a government Help to Buy scheme to support new build homes “on acceptable terms.”

Around 30 percent of the 4 million residential leasehold properties in England in 2014/15 were houses, according to government data.

Reporting by Costas Pitas; editing by Guy Faulconbridge

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