Good News for Leaseholders

There has been good news for owners of recently built leasehold properties following action by the Competition and Markets Authority (CMA). 

The CMA launched an investigation in 2019 due to concerns about leaseholders facing huge and unexpected increases in the cost of buying their freehold and doubling of ground rents. This has left home owners with large unexpected costs and caused problems when trying to sell their property.

This investigation led to the CMA launching enforcement action against 4 freeholders in September 2020. Now two companies, Persimmon and Aviva, have agreed to change their practices.

Developer, Persimmon, have agreed to cap the price leaseholders have to pay to purchase their freehold to £2,000. Persimmon say the cap applies to any leases sold after 1 January 2000 and will run until 31 December 2026. In addition, anyone who acquired their freehold from Persimmon and still owns that freehold, can apply to be re-imbursed for the difference between the price paid and £2,000.

Aviva bought freeholds from developers, thereby taking over the leases. Some of these leases contained clauses which imposed a periodic doubling of ground rents. Aviva has now agreed to dis-apply these doubling clauses and repay homeowners who have already paid the increased rents.

The CMA have said “We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action”.

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