Major housing developer Taylor Wimpey has pledged to strike out leasehold terms that doubled the ground rent every 10 years, the Competition and Markets Authority has announced. The watchdog warned that it will take legal action against other developers that refuse to remove similar clauses.
In an announcement, the CMA said Taylor Wimpey voluntarily gave formal commitments to remove terms from leasehold contracts that cause ground rents to double in price. 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 will also be removed. Taylor Wimpey will also stop selling leasehold properties with doubling ground rent clauses.
By entering into voluntary undertakings, Taylor Wimpey said there was no finding that Taylor Wimpey infringed UK consumer law.
Taylor Wimpey chief executive Pete Redfern said: ‘Taylor Wimpey has always sought to do the right thing by its customers, shareholders and other stakeholders, and we are pleased that today’s voluntary undertakings will draw this issue to a full close, within our original financial provision.’
CMA chief executive Andrea Coscelli 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.’
Leasehold enfranchisement specialist Katie Cohen, of national firm Keystone Law, described the announcemt as 'encouraging for leaseholders'. 'This further demonstrates developers recognising that the future of ground rent in residential leases is short lived,' she said.
The government has pledged to remove ‘onerous’ ground rents. The Ground Rent Bill setting the ground rent for new leasehold properties at ‘one peppercorn’ per year is close to reaching the final stages of its passage through parliament. During the last parliamentary debate, conveyancing solicitors were criticised for failing to properly advise current leaseholders who feel ‘trapped’ in their own home.
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