Hope over leases double whammy

THERE’S more good news this week for the thousands of property owners whose leasehold contracts are making their homes impossible to mortgage or sell.

Thanks to campaigners, the Competition and Markets Authority (CMA) launched a probe in 2019 into leaseholders facing huge and unexpected rises in the cost of buying a freehold or massive increases in ground rents.

In many cases, the ground rent can double every 10 to 15 years.

As a result the CMA launched enforcement action in September last year against Countryside and Taylor Wimpey for using unfair contract terms.

They also took on Barratt Developments and Persimmon Homes.

The regulator then gave the firms the opportunity to voluntarily rectify the situation for leaseholders – as it always does – and, thankfully, progress is now being made to clean up the industry.

Insurance group Aviva (which purchased freeholds from developers) and Persimmon gave commitments to the CMA in June.

Aviva agreed to remove ground rent terms which the CMA considered unfair and to repay homeowners who saw rents doubled.

Persimmon Homes promised to offer leasehold house owners the opportunity to buy the freehold of their property at a discounted price and to make repayments to some homeowners who had already bought their freeholds.

Countryside Properties – one of the UK’S leading housing developers – has this week also given formal commitments to the CMA to scrap unfair contract terms.

It has promised to remove leasehold terms that double the ground rents every 10 to 15 years.

And it also promised to get rid of leasehold terms that had been converted from doubling ground rent to increasing it in line with the Retail Prices Index (RPI).

This is clearly a step in the right direction to make leaseholds fair for the consumer.

However, much more still needs to be done – especially for those who live in a high rise and are now expected to put their hands in their pockets to pay for replacing dangerous, flammable cladding and other materials.

The CMA’S investigations into Barratt Developments and Taylor Wimpey are still ongoing.