LATEST: CMA forces two leading house builders to ditch ‘doubling ground rent’ contracts

Housing developers Countryside and Taylor Wimpey have been ordered to ditch contracts forcing leaseholders to pay ground rents that double every 10 or 15 years.

It follows enforcement action by the Competition and Markets Authority (CMA) into the two firms for potentially using unfair contract terms which break consumer protection law. As this increase is built into contracts, it means homeowners can struggle to sell or mortgage their properties, while the terms can also affect their property rights.

The CMA has ordered them to remove ground rent terms from all existing Countryside and Taylor Wimpey contracts and to agree not to use the terms again in any future leasehold contracts.

Unacceptable

Andrea Coscelli, CMA chief executive, believes it’s unacceptable that homeowners find themselves trapped in their homes. He says: “Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure that they are on the right side of the law. If these developers do not address our concerns, we will take further action, including through the courts if necessary.”

Housing Secretary Robert Jenrick adds that unfair practices such as crippling ground rents have no place in the housing market. “This behaviour must end and I look forward to appropriate redress being forthcoming for leaseholders,” he says.

Countryside and Taylor Wimpey now have the chance to respond to the CMA’s concerns and avoid court action by signing formal commitments to remove the ground rent terms from their leasehold contracts. The action comes despite Taylor Wimpey signing up to the government ‘leasehold pledge‘.

As part of its review of the leasehold sector, the CMA will investigate investment companies that bought freeholds from these developers and continue to use the same leasehold contract terms. Its other study into Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes is still ongoing.

Read more about leasehold terms and conditions.

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