For applications received from 11^th May 2017, the maximum starting ground rent on all new-build leasehold properties will be limited to 0.1% of the property’s value.

Unreasonable ground rent multipliers are forbidden and the escalation of ground rent should be linked to a verified index, such as the retail price index.

Robert Stevens, head of property risk, data and strategy at Nationwide, said: “As a mutual building society that looks to protect its members, we have decided to make changes to the way we value new-build properties on a leasehold basis.

“We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new-build houses, and to ensure that onerous leasehold terms – including ground rents – are properly considered and controlled in order to safeguard our mortgage members.

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“Nationwide is taking a proactive, leading position on this issue to address a significant risk facing our members and to challenge what we believe to be poor practice in the new-build market.”

The Conveyancing Association (CA) has announced its support for Nationwide’s changes to its new-build leasehold policy.

Beth Rudolf, director of delivery at the Conveyancing Association, said: “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.”