The Competition and Markets Authority (CMA) first launched an investigation into four housing developers last year over concerns they were using unfair contract terms and potentially mis-selling leasehold homes. Now, it has written to two of the firms-Countryside and Taylor Wimpey- to ban the use of doubling ground rent terms. Its investigation into the other developers-Barratt Developments and Persimmon Homes-is on-going.
Under the shake-up, Countryside and Taylor Wimpey will still be allowed to charge ground rents, including those that increase in line with inflation-something the CMA says it’s still investigating-but they must:
- Remove doubling ground rent terms from all existing contracts.
- Agree not to use doubling terms again in any future leasehold contracts.
It’s unclear whether this change also applies to leases that have since been sold on by the house builders to management companies. We’ve asked the CMA and we’ll update this story when we know more. The two companies must now agree to sign formal commitments – known as’undertakings’ – to remove the ground rent terms from their leasehold contracts or they face court action.
The moves comes after it was announced earlier this year that millions of homeowners in England will be given a new right to extend their lease by 990 years and not have to pay any ground rent, while extending a lease or buying a freehold will also become cheaper for many, under sweeping new Government reforms. Housing secretary Robert Jenrick has labelled’crippling’ ground rents as’unfair’.