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15th September 2021
Countryside Properties have announced that it has voluntarily given formal commitments to the Competition and Markets Authority (CMA) to remove unfair terms from their leasehold contracts that cause ground rents to double in price every 10 or 15 years. In the announcement, Countryside Properties agreed to keep the ground rents paid by leaseholders at the same level as when they first bought their home.
The announcement follows 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 as part of its ongoing work to tackle issues in the leasehold sector.
The CMA’s investigation was prompted by concerns about the fairness, clarity, and presentation of some leasehold contract terms, which had led to leaseholders suffering from high fees or onerous leasehold terms.
The commitment from Countryside Properties comes after the CMA launched enforcement action against four housing developers in September 2020. That action was against Countryside and Taylor Wimpey, for using “possibly unfair contract terms”, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes. The CMA’s investigation into Barratt Developments and Taylor Wimpey continues.
Andrea Coscelli, CMA Chief Executive, said:
“Leaseholders with Countryside can now breathe a sigh of relief knowing they will no longer be forced to pay these doubling ground rents. No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property. We will continue to robustly tackle developers and investors – as we have done over the past 2 years – to make sure that people aren’t taken advantage of.
Other developers, such as Taylor Wimpey, and freehold investors now have the opportunity to do the right thing by their leaseholders and remove these problematic clauses from their contracts. If they refuse, we stand ready to step in and take further action – through the courts if necessary.
This is the kind of issue that could be resolved at pace and met with fines if the CMA receives the consumer powers that the Government is currently consulting on.”
Housing Secretary, Robert Jenrick, said:
“We asked the CMA to investigate the use of unfair practices in the housing market, such as doubling ground rents – and I welcome their continued success in bringing justice to homeowners.
This settlement with Countryside will mean thousands more leaseholders are given the fair treatment they deserve and marks the third major agreement with leading UK developers and investors. I strongly urge others to follow suit and end these historic practices.
We will continue to support leaseholders who may have been mis-sold properties and our new legislation will put an end to this practice for future homeowners, by restricting ground rents in new leases to zero.”
As part of its review of the leasehold sector, the CMA is continuing to investigate investment groups Brigante Properties, and Abacus Land and Adriatic Land, after it wrote to the firms earlier this year setting out its concerns and requiring them to remove doubling ground rent terms from their contracts. The CMA’s investigation into Barratt Developments and Taylor Wimpey is also ongoing.
- Competition & Markets Authority launches enforcement action
- CMA videos and guides for consumers who may own or be buying a leasehold property
- Competition & Markets Authority to investigate leasehold mis-selling
- Competition & Markets Authority launches consumer law investigation into leasehold market