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Taylor Wimpey to change leasehold contracts following watchdog investigation
Following an investigation by the competition watchdog, one of the UK’s largest house builders will remove terms from its leasehold contracts that cause ground rents to double in price every 10 years.
Taylor Wimpey has voluntarily given commitments to the Competition and Markets Authority (CMA) to remove the terms from its leasehold contracts that see ground rents double in price.
The CMA called the news a “victory for leaseholders”, while the National Leasehold Campaign said it was “delighted” with the move.
It comes more than a year after the CMA launched enforcement cases against four major house builders – Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey – after it found they may have miss-old leasehold homes.
The CMA said it has already secured commitments from Countryside and Persimmon, while the investigation into Barratt Developments remains ongoing.
Alongside removing terms from leasehold contracts that cause ground rents to double in price, Taylor Wimpley will also remove terms which had originally been ground rent doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index (RPI).
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Taylor Wimpey leaseholders will now see their ground rents remain at the original amount when the property was first sold and they will not increase over time.
Dr Andrea Coscelli, chief executive of the CMA, said the doubling ground rent clause was “totally unwarranted” and “led to people being trapped in their homes, struggling to sell or obtain a mortgage”.
He urged other developers and freehold investors to “do the right thing for homeowners and remove these problematic clauses from their contracts”.
Otherwise the CMA “stand ready to step in and take further action”, he added.
Housing secretary Michael Gove said today’s agreement “will help to free thousands more leaseholders from unreasonable ground rent increases”.
“Other developers with similar arrangements in place should beware, we are coming after you,” he added.
Katie Kendrick, founder and spokesperson for the National Leasehold Campaign, applauded the CMA for its “continued progress” and called on the government “to accelerate their work on leasehold reform”.
In January the government announced plans to introduce legislation that would give leaseholders the right to extend their leases by up to 990 years at zero ground rent.
Mr Gove said: “We continue our work to protect and support all leaseholders and our legislation to restrict ground rents in new leases to zero will put a stop to such unfair charges for future homeowners once and for all.”
