Service charges and other issues
A guide to service charges, administration charges, ground rent, recognised tenants associations and forfeiture.
18th March 2022
Today the Competition and Markets Authority (CMA) has announced that 15 businesses that had bought freeholds from housing developer Countryside have now given formal commitments – known as undertakings – to CMA to remove terms that cause ground rents to double in price. The businesses are:
- Adriatic Land 3 Limited (part of the Abacus Land and Adriatic Land investment group)
- Brigante Properties Limited
- Chris Allnutt and Company Management Limited
- Claycourt Limited
- Great Places Housing Association
- London and Quadrant Housing Trust 2007
- Mann Island Properties Limited
- Notting Hill Genesis
- Penult 101 Limited
- Poplar Housing and Regeneration Community Association Limited
- RG Reversions 2014 Limited
- RMB 102 Limited
- SF Ground Rents No 15 Limited
- Tapestart Limited
- Weathercourt Limited
This action follows Countryside Properties September 2021 announcement that it had voluntarily given formal commitments to CMA to remove unfair terms from their leasehold contracts that cause ground rents to double in price every 10 or 15 years. The move followed a probe by the Competitions and Markets Authority as part of its ongoing investigation into the leasehold market; and formal commitments it secured from Aviva and Persimmon in June 2021 as part of its ongoing work to tackle issues in the leasehold sector.
Andrea Coscelli, Chief Executive of the CMA, said:
“Thousands more leaseholders can now rest easy knowing they will not be forced to pay costly doubling ground rents. We believe these terms are unjust and unwarranted, and can result in people trapped in homes they are unable to sell or mortgage – a major cause of anxiety and stress for so many.
“We welcome the commitment from these businesses to do what is right by their leaseholders by removing these terms, and we will hold them to it.
“While this is a huge step forward, our work here isn’t done. We will continue to work hard to free leaseholders from these problematic terms and will now be putting other housing developers under the microscope.”
Secretary of State for Levelling Up Michael Gove said:
“We are restoring fairness in the leasehold system and that’s why we asked the CMA to investigate unjust practices, such as doubling ground rent.
“I welcome their ongoing success in eradicating this unacceptable treatment of leaseholders from the housing market and freeing thousands from such inflated costs. Others must now follow suit, as our work to help all leaseholders continues.
“Homebuyers starting a new lease from this summer will now pay nothing in ground rent costs – setting the path to a more equal future for homeownership.”
As part of its ongoing review, the CMA is continuing to investigate two investment groups: Brigante Properties, and Abacus Land and Adriatic Land. While both firms have agreed to remove doubling ground rent terms from the leases they bought from Countryside, the CMA is seeking the same in relation to leases they bought from Taylor Wimpey. The CMA maintains that these terms must be removed. The CMA’s investigation into possible mis-selling by Barratt Developments is also continuing.