20,000+ leaseholders have benefited so far from CMA’s inquiry.
“People now have a fresh lease of life, liberated from difficulties like expensive increasing ground rent conditions,” said the interim CEO of the CMA.
Nine businesses that purchased freeholds from renowned home builder Taylor Wimpey have given the Competition and Markets Authority (CMA) commitments. Crest Nicholson, Redrow, Miller Homes, and Vistry are the additional four national developers that have committed to cooperate with the firms who bought the freeholds in order to eliminate double conditions.
Over 5,000 homes in the UK will be impacted by the change, and many may get refunds for increased rent.
Problematic contract clauses that result in ground rent prices doubling every ten years must now be eliminated by all nine businesses.
These conditions may cause individuals to be stuck in properties they are unable to sell or finance.
Additionally, the companies will get rid of language in contracts that were initially doubling clauses but were changed to allow ground rent to rise in accordance with the Retail Price Index (RPI).
The CMA thinks the original doubling terms were unjust and ought to have been completely eliminated rather than changed to a different clause that still raises the rent.
With this move, there have now been more than 20,000 homeowners who have benefited from the CMA’s investigation.
All impacted leaseholders will now see a permanent decrease in their ground rents, which will now stay at the original rate from when the property was initially sold.
Additionally, the nine freeholders have agreed to reimburse residential leaseholders who have already paid ground rent that was doubled.
Interim CMA Chief Executive Officer Sarah Cardell said:
We feel that unjust practises have been plaguing leaseholders for many years. We thus tried to address the issue by bringing legal action against some of the most recognisable figures in the industry.
We were able to rescue over 20,000 individuals from problems like expensive increasing ground rent conditions, giving them a fresh lease of life.
Greg Clark, the secretary of state for levelling up, said:
This is fantastic news since it will allow thousands of leaseholders to get their just returns.
This government’s major priorities include boosting house ownership and developing a more equitable and open leasehold system, and these agreements serve as an illustration of these goals in action.
In order to make sure that more leaseholders get the fair treatment they deserve, we will continue to cooperate with the CMA to challenge the industry’s practises.
Since 2019, the CMA has worked to address concerns with potential leasehold house misselling and what it sees as discriminatory contract conditions. Investigations of seven prominent real estate developers and companies that bought freeholds from them resulted in the following significant changes:
9 companies who bought Taylor Wimpey freeholds promise to remove troublesome doubling terms in August 2022.
The developers Crest Nicholson, Miller Homes, Redrow, and Vistry have agreed to assist in getting doubling clauses out of leases agreements they have sold on.
March 2022: Ground rent conditions that doubled for 15 companies who purchased freeholds from Countryside are removed.
By the end of December 2021, Taylor Wimpey will have eliminated all of its contracts’ doubled ground rent clauses and RPI-based clauses.
September 2021: Countryside Properties eliminates double ground rent clauses in connection to freeholds it owns.
June 2021: Persimmon gives leased property owners the chance to purchase the freehold of their home at a reduced cost that more accurately represents what they anticipated when they first purchased it.
In respect to the freeholds it purchased, Aviva lifts the increasing ground rent clauses in June 2021.
The CMA is speaking with other businesses as the probe nears its conclusion, including the investment company Abacus Land and Adriatic Land, which purchased freeholds from Taylor Wimpey.
Remarks for editors
The assurances were given freely to the CMA without any acknowledgment of guilt or culpability. It should not be presumed that any of the nine firms have broken the law; a court must rule on the issue.
Cooperating with the CMA by negotiating with freeholders to get doubling provisions removed from their leases include Crest Nicholson, Redrow, Miller, and Vistry. Galliford Try, Linden, and Bovis Homes are all part of Vistry PLC, which it bought in 2020.
The nine companies that bought Taylor Wimpey’s freeholds and have given undertakings are: a) BDP Freehold Limited; b) Mortgage Incentive Funds Limited; c) The Bridges (Darlington) Management Company Limited; d) Bessant Properties Limited; e) Brigante Properties Limited; f) Furatto Limited and Long Term Reversions No 1 Limited; g) SF Ground Rents No18 Limited, SF Ground Rents No 15 Limited,
The following is a list of the companies that acquired Taylor Wimpey freeholds but have not yet submitted undertakings.
The CMA is still working with these companies: Abacus Land 4 Limited, Adriatic Land 1 (GR3) Limited, Island Apartments Freehold Limited, Madison Close Freeholders Limited, Elmdon Real Estate LLP, Abacus Land 1 (Holdco 1) Limited, and Plaza 2 Surbiton Limited are all members of the Abacus Land and Adriatic Land investment group.
Since our last update on March 18, 2022, the CMA has finished talking to the two remaining freeholders who bought Countryside leases. Both Wallace Estates Limited and D.A.T.S. (Holdings) Limited have now made amendments for the benefit of leaseholders under comparable agreements.
The main provisions of consumer protection legislation relevant to the CMA’s concerns about ground rent terms are the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs), for contracts entered into before 1 October 2015, and Part 2 of the Consumer Rights Act 2015 (CRA), for contracts entered into on or after 1 October 2015. The UTCCRs and Part 2 of the CRA mandate fair and transparent contract terms in order to safeguard consumers from unfair contract conditions.
Journalists should contact the CMA press office with any questions by phone at 020 3738 6460 or email at press@cma.gov.uk.
The CMA’s General Enquiries team may be reached at general.enquiries@cma.gov.uk or 020 3738 6000 for any public inquiries.