More than 500 households will no longer be subject to terms that cause their ground rents to double in price following further action from the Competition and Markets Authority (CMA), which will see eight additional firms now remove problematic clauses from their leasehold contracts.
These terms, which kick in every 10 or 15 years, can leave people trapped in homes they cannot sell or mortgage, and their property rights can be at risk if they fall behind on payments.
The companies involved, which include investment firms, bought freeholds originally owned by housing developers Countryside, Crest Nicholson, Miller Homes, Redrow, Taylor Wimpey, and Vistry, and continued to use the problematic contract terms at the expense of leaseholders.
All affected leaseholders will now see their ground rents return to the original fee amount – i.e. the amount charged when the property was first sold – and will not increase over time.
George Lusty, interim executive director for consumer protection and markets, said: “This is another great win for leaseholders. Over the past 5 years, we’ve achieved real and impactful change, with over 21,000 households freed from issues such as costly doubling ground rents.
“We hope those affected by this update can breathe a little easier knowing they won’t have to struggle against this type of rising fee anymore – particularly when many are already grappling with high costs elsewhere.”
Since 2019, the CMA has sought to tackle issues around the possible mis-selling of leasehold homes and contract terms that could break consumer law. Its investigations involving leading housing developers – and businesses who purchased freeholds from these firms – have led to landmark changes:
March 2024: 8 freeholders agree to strike out doubling terms from their leaseholders’ contracts.
August 2022: 9 businesses who purchased freeholds from Taylor Wimpey commit to remove problematic doubling terms. Developers Crest Nicholson, Miller Homes, Redrow and Vistry agree to help remove doubling terms from leasehold contracts they sold on.
March 2022: 15 businesses who bought freeholds from Countryside remove doubling ground rent terms.
December 2021: Taylor Wimpey removes doubling ground rent terms, and RPI-based terms that were originally doublers, from all its contracts.
September 2021: Countryside Properties removes doubling ground rent terms in relation to freeholds it owns.
June 2021: Persimmon offers leasehold house owners the opportunity to buy the freehold of their property at a discounted price that better reflects what they expected when they originally bought their home.
June 2021: Aviva removes doubling ground rent terms in relation to freeholds it bought.
As part of the CMA’s work in the sector, it has responded to government’s consultation on the Leasehold and Freehold Reform Bill, specifically Modern leasehold: restricting ground rent for existing leases. The response to the consultation can be read in full here and considers the negative impacts of ground rent and how a price cap could benefit homeowners.
Given the Bill outlines proposals to cap existing ground rents, the CMA’s consumer protection law enforcement work in the leasehold sector is now largely at an end.
Ground rents were neither legally or commercially necessary – NLC’s response
