Are rising ground rents affecting you?

If so, there is some good news for you!

Intervention by the Competition and Markets Authority (CMA) has freed more leaseholders from increasing ground rent terms, that saw them trapped with homes they struggled to sell or mortgage.

What shape has this intervention taken?

This intervention has led to people who had bought freeholds from housing developer Countryside give formal commitments to the CMA to remove terms that cause ground rents to double in price.

Why this intervention?

The move comes after the CMA launched enforcement action against four housing developers in September 2020. These included Countryside and Taylor Wimpey for using possibly unfair contract terms, as well as Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes.

Countryside was told to remove the doubling ground rent terms from its contracts. The CMA also turned its eye to businesses that bought Countryside freeholds. Whilst they continued to use the same ground rent terms at the expense of leaseholders. The CMA wrote to these businesses, setting out its concerns and requiring them to remove these terms from their contracts.

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.”

He goes onto say that more housing developers to be put ‘under the microscope’ as investigation continues

Due to the CMA’s intervention:

Thousands of leaseholders will now see their ground rents remain at the original amount when the property was first sold. This will now not increase over time.

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.”

If you have any questions please do get in touch with a member of the team. Or alternatively give us a call on 01903 234094.