Competition watchdog secures ground rent reductions for leaseholders

Thousands more leaseholders are expected to see ground rents cut and some may even receive refunds, according to the Competition and Markets Authority’s (CMA) ongoing investigation.

The competition watchdog has secured undertakings from nine companies that bought freeholds from housing developer Taylor Wimpey.

A further four national developers – Crest Nicholson, Redrow, Miller Homes and Vistry – have also agreed to work with the companies who purchased their freeholds to remove doubling terms.

The move will impact more than 5,000 households throughout the UK, with many who paid a doubled rent receiving a refund.

All nine firms must now remove problematic contract terms that cause ground rents to double in price every 10 years.

These terms can lead to people being trapped in homes they cannot sell or mortgage.

The firms will also remove contract terms that were originally doubling clauses, but were converted so the ground rent increased in line with the Retail Price Index (RPI).

The CMA said it believes that the original doubling clauses were unfair and should therefore have been fully removed – not replaced with another term that still increases the rent.

This action brings the total number of homeowners that have benefitted from the CMA’s investigation to over 20,000, the watchdog said.

The nine freeholders have also agreed to refund residential leaseholders who had already paid out under doubled ground rent terms.

Sarah Cardell, interim chief executive of the CMA, said:

“For years leaseholders have been plagued by what we believe are unfair practices. That’s why we sought to tackle the problem by launching action against some of the biggest names in the business.

“As a result of our work, over 20,000 people now have a new lease of life, freed from issues like costly doubling ground rent terms.”

Housing Secretary Greg Clark added:

“This is good news that will see thousands of leaseholders get the refunds they are entitled to.

“Levelling up home ownership and creating a fairer, more transparent leasehold system is a top priority for this government, and these agreements are an example of this in action.

“We will work with the CMA to continue challenging industry on its practices, so we can ensure more leaseholders get the fair deal they deserve.”

Kindly shared by Estate Agent Today

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