Taylor Wimpey has agreed to remove terms from leasehold contracts that cause ground rents to double in price every 10 years.
The effect of these increases has been that people have often struggled to sell or obtain a mortgage on their home. Their property rights can also be at risk if they fall behind on their rent.
Taylor Wimpey 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).
The company has taken the decision voluntarily following discussions with the Competition and Markets Authority (CMA).
The move comes after the CMA launched enforcement action against four housing developers in September 2020. These were Countryside and Taylor Wimpey, for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes.
As part of this action, the CMA has already helped thousands of leaseholders by securing commitments from Countryside and Persimmon, as well as from an investor in freeholds, Aviva.
Due to the CMA’s action, affected Taylor Wimpey leaseholders will now see their ground rents remain at the original amount – i.e. when the property was first sold – and they will not increase over time. Taylor Wimpey has also confirmed to the CMA that it has stopped selling leasehold properties with doubling ground rent clauses.
Where Taylor Wimpey has sold the freehold, and cannot remove clauses itself, then it will help get them removed at no cost to leaseholders. This will involve liaising with the current freeholder and making a financial contribution to the freeholder when the freeholder gives formal commitments to the CMA to remove the clauses.
Andrea Coscelli, Chief Executive of the CMA, said: “This is a huge step forward for leaseholders with Taylor Wimpey, who will no longer be subject to doubling ground rents. These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage.
“Other developers and freehold investors should now do the right thing for homeowners and remove these problematic clauses from their contracts. If they refuse, we stand ready to step in and take further action – through the courts if necessary.”
The CMA points out that these undertakings have been provided to the CMA voluntarily and without any admission of wrongdoing or liability. It should not be assumed that Taylor Wimpey has breached the law – only a court can decide whether a breach has occurred.
Please contact us if you would like advice about the legal aspects of buying or selling a home.