Praise for Nationwide’s crackdown on leasehold mortgage conditions
There has been widespread praise for the Nationwide building society’s crackdown on criteria for leasehold mortgage conditions on new build homes.
From May 11 – that’s less than a week’s time – leasehold mortgage conditions on new-build transactions must be for a minimum of 125 years for apartments and 250 years for houses.
Ground rents must be a maximum of 0.1 per cent of the property value and must be “reasonable at all times” while “unreasonable” multipliers such as ground rent doubling every five, 10 or 15 years, will render the property ineligible for a mortgage from Nationwide. Instead any ground rent increase must be linked to a verifiable and – again – “reasonable” index.
Nationwide’s head of property risk, data and strategy, Robert Stevens, describes the move as ensuring that “onerous leasehold mortgage conditions, including ground rents, are properly considered and controlled.”
Several house builders have been sharply criticised in recent months for what many consider to be unreasonable ground rent and leasehold conditions, often entered into unwittingly by purchasers. The government was believed to be about to take action when the snap General Election was called for June 8.
Nationwide has been widely praised for the move, particularly by the Conveyancing Association’s director of delivery, Beth Rudolf.
“We applaud Nationwide for delivering these leasehold policy changes and hope that other lenders will follow suit; this is particularly helpful while the government is in a purdah situation and therefore unable to deal with the growing issues surrounding leasehold until post-General Election.
“The CA hopes MPs will be including leasehold reform within their election promises given how significant a local issue it is and that the new government will ensure that housing minister Gavin Barwell’s promise at the end of last year to review leasehold, does not fall by the wayside, given the significant concerns from the industry, consumers and MPs.
“Leasehold needs complete reform to reflect a modern approach to the tenure of shared amenity properties and to bring fairness to the homeowner, while reducing delays and costs in the home moving process.”