Housebuilder Taylor Wimpey’s (TW.L) leaseholders no longer have to pay ground rents that double every 10 years, following action by the UK’s Competition and Markets Authority (CMA).
Affected leaseholders’ ground rents will no longer increase and will remain at the amount charged when they first bought their home.
The CMA said high ground rent mean people often struggle to sell or obtain a mortgage on their home, and property rights can also be at risk if they fall behind on their rent.
“This is a huge step forward for leaseholders with Taylor Wimpey, who will no longer be subject to doubling ground rents,” said Andrea Coscelli, CEO of the CMA.
“These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage. I hope the news they will no longer be bound into these terms will bring them some cheer as we head into Christmas.”
Pete Redfern, Taylor Wimpey's CEO, said the company "has always sought to do the right thing by its customers, shareholders and other stakeholders, and we are pleased that today’s voluntary undertakings will draw this issue to a full close, within our original financial provision.”
The government had earlier said that ground rents, often levied by freeholders on leaseholders, “can make it feel like [leaseholders] are paying rent on a property they own.”
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The CMA launched investigations against four housing developers last year: Countryside (CSP.L) and Taylor Wimpey, for using possibly unfair contract terms, and Barratt Developments (BDEV.L) and Persimmon Homes (PSN.L) over the possible mis-selling of leasehold homes.
It has already taken action against Countryside and Persimmon, while the investigation into Barratt is ongoing.
“Other developers and freehold investors should now do the right thing for homeowners 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,” said Coscelli.
Secretary of state for levelling up, Michael Gove, added that "unfair practices, such as doubling ground rents, have no place in our housing market - which is why we asked the CMA to investigate and I welcome their success in holding these major industry players to account.”
“Other developers with similar arrangements in place should beware, we are coming after you.”