Taylor Wimpey told the Competition and Markets Authority that her tenants will no longer see their land rents double every 10 years.
The homebuilder also said it would remove the conditions that led it to convert the land rent doubling clauses to a basis for increases on the retail price index.
In addition, tenants’ ground rents will remain at the amount specified when their property is first sold.
In the summer of this year, AMC struck a deal with Aviva to pay tenants whose ground rent has doubled and with Persimmon Homes, to give tenants the option of buying their freehold at a reduced price.
An investigation into Barratt Developments is “ongoing,” according to the CMA.
CMA Managing Director Andrea Coscelli said: “This is a huge step forward for tenants with Taylor Wimpey who will no longer be subject to the doubling of land rents.
“These are totally unwarranted obligations that lead people to get stuck in their homes, struggling to sell or get a mortgage. I hope the news that they will no longer be bound by these terms will bring them some joy as Christmas approaches.
“Other freehold developers and investors should now do the right thing for homeowners and remove these problematic clauses from their contracts. If they refuse, we are ready to step in and take further action, if necessary in court.
“Of the four developers against whom the CMA opened a case in September 2020, three have now settled with the CMA. Only the investigation into Barratt Developments is still ongoing.
“This is the kind of problem that could be fixed quickly and accompanied by fines if the CMA were given the consumer powers that the government is currently consulting on.”
And State to the Top Secretary of State Michael Gove comments: “Unfair practices, such as doubling land rents, have no place in our housing market – that’s why we asked it is up to the AMC to investigate and I welcome their success in forcing these major industry players to Account.
“This settlement will help free thousands of additional tenants from unreasonable increases in ground rent and other developers with similar provisions in place should beware, we are coming after you.
“We continue to work to protect and support all tenants and our legislation to limit ground rents to zero in new leases will end these unfair charges on future landlords once and for all. “
Jonathan Frankel, Leasehold Emancipation Specialist at Cavendish Legal Group, adds: “Hopefully in 2022 we will see more home builders follow suit and announce that tenants who bought properties from them will no longer be subject to land rents which double every 10 years.
“However, while this announcement from Taylor Wimpey and others like it earlier in the year from Persimmon, Aviva and Countryside is welcome, the larger issue of the flawed land rent system still needs to be properly addressed.
“We are being contacted by a growing number of tenants seeking advice on unfair ground rents, which are not only onerous but also make it difficult to sell their properties.
“The Land Lease Rental Reform Bill which is currently under consideration in Parliament will ensure that new leases will not have the problem of increasing land rents.
“Unfortunately, he will not address the problem of increasing land rents on existing leases, leaving landlords with such leases in limbo unless they themselves act in seeking a legal solution. “