Decline in selling new-build houses as leaseholds comes after politicians and buyers attack practice

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The number of new-build houses being sold as leaseholds in England and Wales fell sharply last year, as major housebuilders responded to criticism of the practice from homebuyers and the government.

According to new figures from the Office for National Statistics (ONS) 2018 saw 3,242 new houses sold as leasehold in England and Wales, accounting for 4% of the total of 81,050 new houses sold last year, versus 13% in 2017.

Sales of existing leasehold houses – 41,686 – in 2018 remained similar to 2017 at 6.6% of all sales of existing houses.

Two years ago major housebuilders hit the headlines as buyers complained that their new-build houses were sold with onerous ‘doubling ground rent’ leases, which customers criticised as unfair and financially punitive.

Housebuilders Taylor Wimpey and Countryside Properties subsequently came up with costly rescue packages to compensate buyers whose leases could have seen them paying thousands in ground rent after a few years.

Earlier this year communities minister James Brokenshire said more than 40 housebuilders had signed a voluntary pledge not to issue leases on new-build houses, while last week the Labour party promised to ban leaseholds for such new-builds in England outright once it is in government.

ONS figures showed the north west of England had the highest rate of new houses being sold as leaseholds, 21.8%, although this was down from 58.5% in 2017. London had the second-highest percentage, with leaseholds accounting for 15.9% of new house sales. This was a relatively small drop from 2017, the ONS said.

Out of all leasehold sales of new houses in 2018, two-thirds were in the north west. Within the region the Greater Manchester area had the highest percentage of new house sales that were leasehold in 2018.

The latest estimate of the total stock of leasehold dwellings in England was 4.3 million in 2016 to 2017, the most recent period for which estimates are available.

Noting the large percentage fall Nigel Henretty, the ONS’ head of housing analysis, said: “The government’s announcements about potential changes to the leasehold system may have driven the decreases.”

The fall in new houses being sold as leasehold was across all house types in 2018, with each dropping by more than half compared with the previous year. New terraced houses were the most likely to be sold as leasehold, with 6.7% of all new terraced houses being sold as leasehold in 2018.

The largest percentage drop was for sales of new leasehold detached houses, which fell from 12.2% of all new detached houses sold as leasehold in 2017, to 3.1% in 2018.

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