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Unfair Ground Rent Terms for Leaseholders Dropped
23/12/2021


 

 

Unfair Ground Rent Terms for Leaseholders Dropped

 

 

 

CMA launched enforcements back in September 2020 against four housing developers: Countryside and Taylor Wimpey for unfair contracts, and Barratt Developments and Persimmon Homes over possible mis-selling of leasehold homes. CMA have managed to settle an agreement with three of the housing developers. Only investigation into Barratt Developments is still ongoing.

 

 

Taylor Wimpey has voluntarily given formal commitments to remove terms from leasehold contracts that sees ground rents double every 10 years. This doubling of ground rent has seen buyers struggle unfairly to sell or obtain mortgages on their homes and leaving many new builds sat struggling to resell on the property market.

 

The clause which originally said to see lease prices double had been converted so that the ground rent increased in line with the Retail Prices Index (RPI). CMA still thought this was unfair and so Taylor Wimpey have also confirmed that it will now stop increases all together and will stop selling leasehold properties with an increase lease clause. Ground rent will now remain at the original amount back when the property was first sold.

 

 

Countryside has formally committed to make changes that will be of benefit to the leaseholders. It will remove clauses from leasehold contracts which stated ground rent to double in price every 10-15 years and the amount payable will remain at the amount of when the property was first sold.

 

Countryside have also confirmed that where they have sold the freehold, they will help the leaseholders in liaising with the current freeholders to come to an agreement. The freeholders will have to give formal commitments to the CMA to remove the unfair clauses.

 

 

Persimmon will offer leasehold home owners the option to buy the freehold of their property at a discount, better reflecting what they expected when they originally bought their houses. This will include making repayments to certain homeowners who have already purchased their freeholds. They have also extended the timeframe prospective buyers are given to exchange contracts after reserving a property and to provide more upfront and accurate information of the annual costs of owning a leasehold home.

 

 

Michael Gove commented “This settlement will help to free thousands more leaseholders from unreasonable ground rent increases and other developers with similar arrangements in place should beware, we are coming after you.

 

We continue our work to protect and support all leaseholders and our legislation to restrict ground rents in new leases to zero will put a stop to such unfair charges for future homeowners once and for all”.

 

 

Another part of the review of the leasehold sector sees CMA investigating two investment groups, Brigante Properties and Abacus Land and Adriatic Land.

 

 

References: Gov News | Gov CMA Case

 

 

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