FTSE Gains But Builders Struggle
The FTSE 100 made some gains on Thursday, but builders struggled following the government’s ban on the sale of new homes on leasehold. The news of the ban hit housebuilders hard, and some have already started speaking out in protest.
The government have opted to forbid housebuilders from selling new homes on a leasehold basis, and has set new ground rents to zero, after having run extensive consultations on the matter over the summer. They say that while leaseholds have generally been applied to flats that had shared spaces, housebuilders were increasingly trying to sell individual houses on similar terms, which would leave buyers liable for ground rents. In some extreme cases, the costs for homeowners have spiralled, and buyers have been exploited with onerous ground-rent terms and charges that were hard to justify. The public have responded well to the measures, but housebuilders are less happy with the news.
Berkeley Group fell by 1.35 percent, Persimmon is down by 1.1 percent, and McCarthy & Stone, listed in the FTSE 250, were the hardest hit, shedding nine percent. The group is expected to make £33 million from selling ground rents in 2018, and say that it plans to make a strong case for exemption, as it is a retirement house builder, and feels that this is a special case that the new rules should not be applied to.
The FTSE 100 overall made some gains, however, as a Santa Rally appears to be in the making.
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