Housebuilders will be banned from selling homes on a leasehold basis, and ground rents for houses and flats will be set to zero under new rules introduced by communities secretary Sajid Javid.

Javid said the government’s consultation on banning unfair leasehold practices had received an “overwhelming response” from the public.

The leasehold system generally applies to flats with shared spaces but developers have been increasingly selling houses on these terms, including homes built under the Help to Buy Equity Loan scheme.

Government statistics estimate there were 4.2 million residential leasehold homes in England in the private sector in 2015 to 2016 and of these 1.4 million were leasehold houses rising from 1.2 million the previous year.

Under the terms of some leasehold agreements ground rents were set to double every 10 years making the properties expensive to run and unattractive to future buyers.

In April, Taylor Wimpey set aside £130m to settle disputes relating to customers affected by its use of the doubling clause.

Javid said: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rent terms.” 

Grant Lipton, co-founder at Great Marlborough Estates, said: “The new measures to cut out unfair and abusive practices within the leasehold system are long overdue. Leaseholds have their place in the market, but what doesn’t have a place is duping people and ripping them off. The proposed changes will curb landlords pushing tenants into unfair ground rents.”

“Ultimately what we need is more transparency at every stage of the house buying process, where consumers are fully aware of their rights and their advisers fulfill their responsibilities.”

The ban is part of a package of measures being introduced to protect homeowners from abuses of the leasehold system. The government is working with the Law Commission to support existing leaseholders and make the process of purchasing a freehold or extending a lease easier, faster and cheaper.

The communities secretary will be writing to all developers to discourage the use of Help to Buy Equity loans for the purchase of leasehold houses in advance of legislation being introduced and to ask those who have customers with onerous ground rent terms to provide necessary redress.

A spokesperson for the Department of Communities and Local Government said: “Legislation to introduce measures that crack down on unfair leasehold practices will be subject to Parliamentary time but we intend for this to as soon as possible.”