Stop Press: The Bath House, Le Cateau Road, Colchester CO2 7NA – Let to Ellisons Solicitors. See our News Page for information on this innovative project.

What do the new leasehold changes mean for property developers?

What do the new leasehold changes mean for property developers?

Pure Commercial Finance discuss the downfall for developers of what these new leasehold changes mean.
The government released the Housing White Paper on February 7th 2018, which set out its priorities for housing and how they can help increase its supply. This can be done by building homes faster, planning for the right homes in right places, diversifying the market and helping people now. This means big changes for developers who currently rely on payments from leases.
There are over 4 million residential leasehold dwellings in England alone, 1.4 million of which are leasehold houses and these new changes will prevent this number from rapidly growing by stopping the sale of new build leaseholds unless completely necessary.
It should become easier and cheaper for leaseholders to buy-out their freehold and further changes (in England only) will include ground rents on new long leases for houses and flats being set to zero.
The Communities Secretary, Sajid Javid has announced a ban on leaseholds for most new build houses to deliver a fairer and more transparent system for homeowners. Hopefully, this will ‘cut out unfair and abusive practices within the leasehold system’.
Javid has said: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.
It’s clear from the overwhelming response from the public that real action is needed to end these feudal practices. That’s why the measures this government is now putting in place will help create a system that actually works for consumers.”
How will the new leasehold changes affect developers?
Tom Lee, Head of Structured Finance at Pure Commercial Finance, had this to say: “Not only will there be less income from annual ground rent fees, but the changes could restrict lending as many lenders will factor in the value of the freehold when calculating the overall GDV of a development site. This allows them to lend more whilst remaining within their LTGDV covenants.
This announcement comes as great news to homeowners, however there are multiple drawbacks for developers.
Previously, builders could also sell the freehold to investors in order to cover the cost of rising building fees and land values, without having to pass the extra costs on to prospective homebuyers. This may no longer be possible.
Overall, these changes could create a two-tier housing market which would make new-build freehold houses more attractive than similar existing leasehold properties.
Peter Riches of Morley Riches and Ablewhite, regularly carries out appraisals for new housing developments and negotiates viability assessments with Local Authorities. He commented – “On recent valuations for development projects, I have noticed there is some inconsistency of approach between valuers about allowing a value for the freehold. This has an impact on value and viability. The quicker this uncertainty is clarified the better for everyone.”

Our Services

Clients choose to work with our friendly, professional team time and time again because we consistently deliver a quality service that makes their lives easier. Our plain-speaking approach ensures everyone is kept on the same page and that a project can move forward in a timely and cost-effective way.

find-a-commercial-property-icon

Commercial Estate Agency

property-management-icon

Property Management

property-valuation-icon

Property Valuation

Landlord and Tenant

Building Surveying

Development Consultancy

What people say about working with us

  • "Peter Riches and his team was recommended to me by a fellow business man.   He has proven himself to be up to a very high standard in his profession and I like the way that he is prompt to deal with any situation in a professional way.   He has a dynamic, enthusiastic team around him which gives me confidence in my decision making in which I value his experienced advice."
    Adrian Coolbergen, Coolbergen Properties
  • "We are very happy with the friendly, professional and pro-active commercial property management service which we receive from Jon Ablewhite and we accordingly have no hesitation in recommending him and his firm."
    Rodney Stock, Bishop’s Stortford
  • "I have worked with Morley Riches and Ablewhite for several years. I have always found them to be trustworthy, professional, responsive and accurate while offering a flexible approach to problem solving. They provide excellent value for money and also deliver additional value through their thorough knowledge and network. Reputation and branding are important to any business so it’s important to select organisations who have a compatible constitution and culture. MRA demonstrate empathy with corporate objectives, they manage customer relationships effectively and efficiently and work seamlessly as part of a team. I would recommend them to anyone who needs a professional property service."
    Steve Heywood, Hills Building Group
  • "Jon Ablewhite of Morley, Riches and Ablewhite has provided professional services to my company for many years. This has included sales, purchasing and renting of office properties in and around Colchester. He has been very professional and thorough, combining this with an understanding of the needs of a business client such as ourselves. Together with Peter Riches, he forms a very strong and likeable team."
    Russell Sainty, Seaford Properties Limited
  • "Peter Riches of MRA has managed an industrial property we own for the last 10 years and we have been delighted with the way our business has been handled. We have always found Peter to be very professional in his attitude; he has a good understanding of what we are trying to achieve, listens to our ideas and offers suggestions of his own. The rest of the team at MRA are always polite, friendly and helpful and we highly recommend the company and the services they offer."
    A J Kernahan, Developments Limited
  • "I have known Peter Riches and indeed some of his staff for many years now.  Our family and I in particular have built a close relationship with Peter, instructing him on numerous occasions for projects, lease renewals, rent reviews etc. and have always found him to be honest, reliable and extremely efficient. Peter will always find a solution to all your property needs and matters – his creative talent, input and valuable knowledge is where he really shines above the rest “bar none”! I would have no hesitation in recommending him or his staff for all your property needs."
    Aaron Taub, Advantage Property Group
Get In Touch

Get in touch

Email enquiries@mrallp.co.uk
Telephone 01206 505707

If you’ve got a question about the services we deliver, or would like some advice on how we can support your project, simply get in touch and we’d be more than happy to help.

Alternatively complete the form below for a member of our team to get in touch.

Your Name (required)

Your Email (required)

Telephone (required)