Further Good News for Leaseholders

Since September 2020, the Competition and Markets Authority (CMA) has been investigating a number of housing developers and investors with regard to possible unfair contract terms. We have reported on their investigation in previous blogs.

The reason for the investigation was due to terms in the leases of new homes, providing for doubling of the ground rent every ten years. These doubling rent clauses have caused problems with selling and mortgaging these properties. The owner’s property rights can be a risk if they fall behind on payments.

In December 2021, Taylor Wimpey, became the latest housing developer to make voluntary formal commitments to the CMA. They have committed to removing doubling rent clauses from all their leases; the owners will pay the initial ground rent value and this will not increase. They have also committed to no longer including clauses that provide for any increase in the ground rent in new leases.

Taylor Wimpey have sold the leases for some properties to other investment companies. Taylor Wimpey have also stated that they will liaise with current owners to remove doubling rent clauses and make financial contributions towards this.

Taylor Wimpey have said that they will contact all leaseholders with doubling rent clauses by mid-February to set out the terms of the offer and the next steps that leaseholders need to take.

The CMA are calling on other developers and freehold investors, who have not made commitments to remove unfair rent terms, to do so voluntarily. If not, they have said they are prepared to take further action; through the courts if necessary.

The contents of this article do not constitute legal advice and are provided for general information purposes only.