Major property developers have agreed to remove “unfair” ground rent terms and sell freeholds at a “discounted price” following the publication of a damning Competition and Markets Authority (CMA) review, it has been announced.
It means leasehold house owners may now have the opportunity to buy the freehold of their home at an affordable rate.
Published in September 2020, the CMA investigation uncovered “troubling evidence” of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling.
It also raised concerns that leasehold homeowners “may have been unfairly treated and that buyers may have been misled by developers”.
Commenting on the report last year, Andrea Coscelli, CMA Chief Executive, said: “It is unacceptable for housing developers to mislead or take advantage of homebuyers. That’s why we’ve launched today’s enforcement action.
“Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that there has been mis-selling or unfair contract terms, these will not be tolerated.”
Following the review, it has this week been announced that investment company Aviva, who bought up thousands of freeholds from developers, will “remove certain terms from its leasehold contracts” which cause ground rents to double, as well as repay homeowners who were affected by these clauses.
Persimmon Homes, meanwhile, agreed to offer leasehold house owners the opportunity to buy the freehold of their property “at a discounted price”.
Commenting on the resolutions, Ms Coscelli added: “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.
“It’s good that Aviva and Persimmon have responded positively to this investigation, enabling these issues to be fixed for leaseholders. But our work isn’t done. We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action.”
To find out more about the undertakings, please click here.
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