Thursday, July 7

Aviva and Persimmon to shake-up leasehold clauses following investigation into unfair terms – here’s what it means for you


The CMA first opened its investigation into the firms in September 2020 after it said it had uncovered “troubling evidence” of potentially unfair terms and mis-selling. But housebuilder Persimmon and investment firm Aviva, which buys freeholds from property builders in order to manage leases, have both agreed to a number of crucial changes to help homeowners.

Investment firms Brigante Properties, Abacus Land, and Adriatic Land have also been told to remove doubling ground rent clauses from the leases they own. They now have the opportunity to respond to the CMA’s concerns and avoid court action by agreeing to remove such terms.

See our What is a leasehold? guide for more on how they work. 

Aviva is to axe doubling ground rent clauses

Here are the key changes Aviva has agreed to: 

  • Axe leasehold clauses that allow ground rents to double or increase in line with the Retail Prices Index (RPI) measure of inflation. These can mean people often struggle to sell or mortgage their homes. These leaseholders’ ground rents will now revert to the original amount when the property was first sold – and this will not increase over time. We’ve asked if this covers both existing and new leases and we’ll update this story when we know more. 

  • Refund hundreds of freeholders who’ve paid for doubling or inflation-linked ground rent increases. The investment firm has agreed to repay homeowners by refunding the excess money they would have paid due to such clauses. We’ve asked for more info on how and when refunds will be paid and we’ll update this story when we know more.  

Persimmon is to offer discounted freeholds

Persimmon, meanwhile, has agreed to the following: 

  • Offer leasehold home owners the chance to buy the freehold of their property at a discounted price. 
  • Refund those who’ve already purchased their freehold and paid more than expected. This addresses concerns raised by consumers with the CMA, and local Trading Standards, that they were led to believe they could buy their freehold at a certain price, only to find out later that this price had increased by thousands of pounds with no warning.

Andrea Coscelli, chief executive of the CMA, said: “This is a real win for thousands of leaseholders – for too long people have found themselves trapped in homes they can struggle to sell or been faced with unexpectedly high prices to buy their freehold. Now, they can breathe a sigh of relief knowing things are set to change for the better.”

More to follow. 

 





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