Sajid Javid pledges to ‘do more’ as Guardian campaign reveals that some buyers of new-build homes face ground rents which double every 10 years

The government has promised to “stamp out” abuses highlighted in a Guardian campaign that revealed how some buyers of new-build homes have been left with virtually unsaleable properties because of rapidly escalating ground rents.

Many buyers of new-build homes, particularly in the north west of England, have been sold their properties on a leasehold basis. Traditionally homes have been sold freehold, but new-style leasehold homes come with ground rents that in some cases double every 10 years. Residents are facing rising costs, or struggling to sell their properties when they want to move.

Answering a question raised by the MP Peter Bottomley, communities secretary Sajid Javid said: “We must make sure the kind of abuses he mentioned are stamped out and we will continue to do everything [we can]. We do work with a number of stakeholders and we can certainly see how we can do more.”

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In one case reported by the Guardian, a buyer of a £101,000 flat in Dudley built in 2010 by Taylor Wimpey found that his wife’s ground rent was set to spiral to £8,000 a year. He said the couple were now trapped in an apartment they could no longer sell because the ground rent review clause in the lease was preventing lenders approving a mortgage.



Clair Scott was another new home buyer devastated by soaring ground rents that have made her £200,000 mid-terrace three-bed house in Bolton, built only six years ago, almost unsaleable.

She claims solicitors advised her buyers not to touch her house as the terms of the lease meant that by 2060 the ground rent would be £9,440 a year. “The sale fell through, and all parties involved are devastated after losing a lot of time and money.”

Others have revealed how houses were sold by developers with the promise that a 999-year lease was “virtually freehold” only to discover that buying out the lease just a few years later was three or four times more expensive than promised.

Bottomley, MP for Worthing West, has been among the sternest critics of leasehold issues for many years.

In a House of Commons question following the government’s promise to build thousands of new homes, he said: “Given that half the new homes will be leasehold, and given the past problems, the present difficulties and the future possibilities of abuse, will my right honourable friend please get together with the Sunday Times and the Guardian, who are covering these abuses, and reassure ordinary people buying their first home that they don’t find it unsaleable and of no value when they come to leave?”



Analysis by campaign group Leasehold Knowledge Partnership earlier this month revealed that nearly £2bn-worth of new-build leasehold houses were sold in England and Wales last year. In most cases, the developer sells the freehold after a couple of years to a private company, which are then sometimes accused of demanding extortionate fees by homebuyers.

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Ground rents are distinct from service charges, which are levied on top. The service charge in a block of flats will pay, for example, for the upkeep of the “common parts” of a development. But no services are offered in return for the ground rent, which is more akin to a tax.

Ground rents have become hugely popular among some investors, as they promise a lucrative guaranteed future income stream at a time when interest rates are at historic lows. Until 2011, the ground rent escalation clauses in many Taylor Wimpey contracts allowed for doubling every ten years, although since then they have shifted to an RPI basis.

Following the Guardian’s campaign, Taylor Wimpey has also promised to review its contracts. It said: “We hadn’t been aware of the concern of some customers and homeowners regarding these pre-RPI clauses and the difficulties that they are currently experiencing in selling or mortgaging their homes. Having heard the cases described and in order to establish the facts, we are undertaking a review of this situation.”



However, conveyancing solicitors who enabled the purchase of a leasehold property without highlighting onerous ground rent clauses are now facing a raft of legal actions from furious buyers.