The Competition and Markets Authority has secured agreements from nine building companies which have purchased freehold properties from Taylor Wimpy to remove their dual ground rent conditions, which will see an additional 5,000 UK households receive refunds.
The watchdog says new actions in its lengthy investigation also mean four other developers – Crest Nicholson, Redrow, Miller Homes and Vistry – have also agreed to work with the companies that bought their freeholds to remove doubling conditions. .
The CMA says: “The nine companies must now remove problematic contract terms that cause the price of land rents to double every 10 years.
“These conditions can lead to people being trapped in homes they cannot sell or mortgage. Companies will also remove contract clauses that were originally doubling clauses but have been converted so that ground rent has increased in line with the retail price index.
He adds that these “doubling clauses were unfair and should therefore have been removed altogether – and not replaced by another clause which further increases the rent”.
The clause has seen landlords with ground rent of around £300 doubling every 10 years.
The regulator says all affected tenants will see their land rents remain at the amount set when the property was first sold, which will not increase over time.
The nine freehold owners also agreed to reimburse residential leaseholders who had already paid under doubled ground rent terms.
The regulator says this latest action in its ongoing investigation into land rent cases, which began in 2019, has so far benefited more than 20,000 households.
CMA Acting Chief Executive Sarah Cardell said: “For years, tenants have been plagued by what we consider to be unfair practices. That’s why we’ve sought to address the issue by taking action against some of the biggest names in the industry.
“Thanks to our work, more than 20,000 people now have a new lease on life, free from problems such as costly doubling of land rents. »
Secretary of State for Upper Level Greg Clark adds“This is good news that will see thousands of tenants get the refunds they are entitled to.
“Leveling homeownership and creating a fairer and more transparent tenancy system is a top priority for this government, and these agreements are an example of that in action.
“We will work with the AMC to continue to challenge the industry on its practices, so that we can ensure that more tenants get the fair deal they deserve.”
The nine companies that have purchased freehold properties from Taylor Wimpey and provided pledges are: BDP Freehold, Mortgage Incentive Funds, The Bridges (Darlington) Management Company, Bessant Properties, Brigante Properties, Furatto Limited and Long Term Reversions No 1 (processed as a single entity), SF Ground Rents No 18, SF Ground Rents No 15 Limited and RMB 102 (treated as a single entity), Sarum Properties and Taylor Court.
The AMC says it is still in talks with five groups that have purchased freehold properties from Taylor Wimpey who have not provided land lease commitments.
These are: Island Apartments Freehold, Madison Close Freeholders, Elmdon Real Estate LLP, Abacus Land 1 (Holdco 1) Limited, Abacus Land 4 Limited and Adriatic Land 1 (GR3) Limited (part of the Abacus Land and Adriatic investment group Land) and Place 2 Surbiton.