You are here: Home - Mortgages - First Time Buyer - News -

End to doubling ground rent terms for thousands of leaseholders

0
Written by:
18/03/2022
Thousands of leaseholders’ ground rents will be charged at the amount set when they first bought their properties, ending the unfair practice of ‘doubling clauses’.

A total of 15 investment firms and housing associations which bought freeholds from developer Countryside have agreed to remove terms allowing them to double ground rents every 10-15 years.

Under this unfair practice, many people struggled to sell their leasehold properties or obtain a mortgage. It also meant they were at risk of losing the property if they failed to keep up with the crippling payments.

The firms will also remove terms relating to ground rent increasing in line with the Retail Prices Index (RPI) measure of inflation, which were a replacement for the doubling clauses.

The Competition and Markets Authority (CMA) which investigated the sector, said the original doubling clauses were unfair terms and should have been fully removed, not replaced with another term that increases the ground rent.

It builds on the CMA’s enforcement action of Countryside where it committed to remove the doubling ground rent terms. But as a number of businesses bought Countryside freeholds and continued to use these unfair terms, the CMA has now gained the same commitments from the 15 firms.

They 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;
  • Penult 101 Limited;
  • RMB 102 Limited;
  • SF Ground Rents No 15 Limited;
  • Great Places Housing Association;
  • London and Quadrant Housing Trust;
  • Mann Island Properties Limited;
  • Notting Hill Genesis;
  • Poplar Housing and Regeneration Community Association Limited;
  • RG Reversions 2014 Limited;
  • Tapestart Limited;
  • Weathercourt Limited.

It means over 3,400 leaseholders’ ground rents will remain at the amount charged when their home was first sold. Overall, the CMA has taken enforcement action against four housing developers, including Countryside and Taylor Wimpey for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes.

‘More equal future for homeownership’

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.”

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.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week