Good news for buyers of new build homes

Published on 27.07.20
Published on 27.07.20

They say good things come in threes and that seems to be the case for anyone thinking of buying a new build home. In this article, we look at the latest Stamp Duty Land Tax cut, the Law Commission’s radical proposals for home ownership and the next round of Help to Buy funding starting next April.

“The leasehold system is not working for millions of homeowners in England and Wales. Our reforms will make a real difference by giving leaseholders greater control over their homes”

SDLT ‘holiday’

Let’s start with the Stamp Duty Land Tax (SDLT) ‘holiday’ Chancellor Rishi Sunak announced in his recent mini-Budget.

The government has increased the nil rate band for SDLT on residential properties from £125,000 to £500,000 until 31 March 2021. This will give 80% of homebuyers who buy in England during the holiday period a complete SDLT exemption.

A word of warning though. We’ve seen a small boom in residential transactions since the end of the lockdown and Sunak’s announcement, especially for new build properties. In many cases, contracts for the purchase of new builds are exchanged while the scheme is being built and completion is due once the developer gives notice that it is finished and ready to move into. Buyers are usually given an expected date for completion, but most contracts build in flexibility for the developer in case the scheme gets delayed beyond this date for one reason or another.

Even if a buyer is told completion is likely to be before the SDLT holiday expires, they should be aware that it could be delayed beyond 31 March 2021 (quite lawfully by the developer under the terms of the contract) with the result that they may end up paying SDLT they thought they had avoided.

From 8 July to 31 March 2021 SDLT rates (other than on second homes) are:

Rate Charge band

0% Up to £500,000

5% Over £500,000 and under £925,000

10% Over £925,000 and under £1,500,000

12% Over £1,500,000

For second homes, an additional 3% is payable on top of the above rates.

Help to Buy extended to 2023

Help to Buy has been extended until March 2023, but the government has said the scheme will be scrapped after this date. The Treasury has committed £4.1bn for the scheme in 2022 and £4.6bn in 2023.

From April 2021, Help to Buy will only offer equity loans to first time buyers and only for properties up to specified regional price caps. These caps are calculated by reference to 1.5 times the first time buyer price in each region. In London, this is £600,000, and in the south east the figure is £437,000.

The government has said it plans to bring in legislation to make all new build houses sold in England freehold and to remove ground rents from leasehold flats. As part of this, the Secretary of State has instructed Homes England to renegotiate Help to Buy contracts to rule out ground rents on the sale of leasehold flats and the sale of new leasehold houses (other than in exceptional circumstances) to protect new home buyers from unscrupulous charges.

Law Commission reform proposals

After being in the pipeline for several years, the Law Commission has finally published three reports aimed at bringing in reforms to end unfair practices in the residential leasehold property market. If implemented, these reforms would represent the most radical shake-up of home ownership in living memory.

The 2,000 pages produced by the Law Commission (which I admit, I have not read in full!) cover leasehold enfranchisement, right to manage and commonhold. Their purpose is to improve “transparency and fairness in the residential leasehold sector” and to offer “a better deal for leaseholders as consumers”.

The reports identify that leases are time-limited, give leaseholders less control over their property than a freehold, and the value of leases tend to reduce over time.

Professor Nick Hopkins, Commissioner for Property Law, said of the proposals: “The leasehold system is not working for millions of homeowners in England and Wales. We have heard how the current law leaves them feeling like they don’t truly own their home. Our reforms will make a real difference by giving leaseholders greater control over their homes, offering a cheaper and easier route out of leasehold, and establishing commonhold as the preferred alternative system.”


Key proposals include:

  • Changing the commonhold system (which has failed to take off since its introduction a few years ago) to overcome many of the issues identified
  • Making it simpler for existing leaseholders to convert their building to a commonhold
  • Allowing shared ownership leases and affordable housing to be included in commonhold
  • Changing the rules of commonhold to make them more secure financially and change the way they are run


Proposals include introducing a new, simplified enfranchisement regime that gives leaseholders of flats and houses the right to obtain a 990-year lease at zero ground rent.

Right to manage

Proposals include simplifying the process that enables leaseholders to take over the management of their building and removing the requirement for leaseholders to pay their landlord’s cost of the right to manage claim.

It is now up to the government to decide which recommendations it wishes to implement, so watch this space.

If you would like to discuss any of the issues mentioned above or any other property-related issue, please contact us.