Housebuilding giant Taylor Wimpey has agreed to drop “unfair” terms in leasehold contracts which cause ground rents to double every 10 years, following an investigation by the UK competition watchdog.
The Competition and Markets Authority (CMA) said the move means ground rents of affected Taylor Wimpey leaseholders will no longer increase and will instead remain at the amount charged when they first bought their home.
It marks the latest landmark agreement in the inquiry, which was launched by the CMA in September 2020 against Barratt Developments, Persimmon, Countryside Properties and Taylor Wimpey.
Countryside said in September that it will end the use of the terms, while Persimmon and Aviva – which invested in freeholds from developers – also said in June that they will remove ground rent terms.
The CMA said its probe into Barratt’s use of the terms is continuing.
It is also continuing to investigate investment groups – Brigante Properties, Abacus Land and Adriatic Land – over the use of the rent terms in their contracts.
CMA chief executive Andrea Coscelli said: “This is a huge step forward for leaseholders with Taylor Wimpey, who will no longer be subject to doubling ground rents.
“These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage.”
He added: “Other developers and freehold investors should now do the right thing for home-owners 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 settlement will help to free thousands more leaseholders from unreasonable ground rent increases and other developers with similar arrangements in place should beware - we are coming after youLevelling Up Secretary Michael Gove
Taylor Wimpey said the cost of the agreement with the CMA will come within original provisions put by, adding that there were no findings that it broke UK consumer law.
The group’s chief executive, Pete Redfern, said: “Taylor Wimpey 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.”
Levelling Up Secretary Michael Gove welcomed the agreement and said there is “no place in our housing market” for unfair practices, such as doubling ground rents.
“This settlement will help to free thousands more leaseholders from unreasonable ground rent increases and other developers with similar arrangements in place should beware – we are coming after you,” he said.
“We continue our work to protect and support all leaseholders and our legislation to restrict ground rents in new leases to zero will put a stop to such unfair charges for future home-owners once and for all.”