Home AM-NC MIL-OSI United Kingdom: CMA frees hundreds more leaseholders from costly contract terms

MIL-OSI United Kingdom: CMA frees hundreds more leaseholders from costly contract terms

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Source: United Kingdom – Executive Government & Departments

Over 500 households freed from problematic ground rent terms after further CMA intervention.

  • Hundreds more people will no longer be stung by doubling ground rents
  • Over 21,000 households in total freed from problematic leasehold issues to date
  • More than 30 companies have signed undertakings since 2019

Following further action from the Competition and Markets Authority (CMA), 8 additional firms will now remove problematic clauses from their leasehold contracts – meaning over 500 households will no longer be subject to terms that cause their ground rents to double in price.

These terms, which kick in every 10 or 15 years, can leave people trapped in homes they cannot sell or mortgage, and their property rights can be at risk if they fall behind on payments. 

The companies involved, which include investment firms, bought freeholds originally owned by housing developers Countryside, Crest Nicholson, Miller Homes, Redrow, Taylor Wimpey, and Vistry, and continued to use the problematic contract terms at the expense of leaseholders.

All affected leaseholders will now see their ground rents return to the original fee amount – i.e. the amount charged when the property was first sold – and will not increase over time.

George Lusty, Interim Executive Director for Consumer Protection and Markets, said:

This is another great win for leaseholders. Over the past 5 years, we’ve achieved real and impactful change, with over 21,000 households freed from issues such as costly doubling ground rents.

We hope those affected by this update can breathe a little easier knowing they won’t have to struggle against this type of rising fee anymore – particularly when many are already grappling with high costs elsewhere.

Since 2019, the CMA has sought to tackle issues around the possible mis-selling of leasehold homes and contract terms that could break consumer law. Its investigations involving leading housing developers – and businesses who purchased freeholds from these firms – have led to landmark changes:

As part of the CMA’s work in the sector, it has responded to government’s consultation on the Leasehold and Freehold Reform Bill, specifically Modern leasehold: restricting ground rent for existing leases. The response to the consultation can be read in full here and considers the negative impacts of ground rent and how a price cap could benefit homeowners.

Given the Bill outlines proposals to cap existing ground rents, the CMA’s consumer protection law enforcement work in the leasehold sector is now largely at an end.

The CMA also recently published its Housebuilding market study final report, as well as launching a new Competition Act investigation into 8 housebuilders following evidence suggesting information sharing.

Notes to editors

1 . The 8 freeholders, and the developers who originally owned those freeholds, are listed below:

Current freeholder Housing developer
Abacus Land 1 (HoldCo 1) Limited Countryside
Adriatic Land 3 Limited and Abacus Land 4 Limited Miller Homes
Adriatic Land 3 Limited Redrow
Island Apartments Freehold Limited Taylor Wimpey
Madison Close Freeholders Limited Taylor Wimpey
Plaza 2 Surbiton Limited Taylor Wimpey
RMB 102 Limited Crest Nicholson
Space in London Limited Vistry

2 . Six of the 8 companies have signed formal commitments, known as undertakings, with the CMA: Abacus, Island Apartments, Madison Close, Plaza 2 Surbiton, RMB 102 LTD, and Space in London.

3 . Two of the 8 companies – Adriatic Land 3 Limited and Abacus Land 4 Limited – have made offers to their leaseholders to remove doubling clauses from contracts that were originated by Miller Homes and Redrow.

4 . Vistry PLC includes Linden Homes and Vistry Partnerships, the former housebuilding businesses of Galliford Try, which were acquired by Bovis Homes in 2020. In 2022, Vistry Group acquired Countryside Partnerships.

5 . Any undertakings have been provided to the CMA voluntarily and without any admission of wrongdoing or liability. It should not be assumed that any of the businesses involved in today’s announcement have breached the law – at present, only a court can decide whether a breach has occurred.

6 . All enquiries from journalists should be directed to the CMA press office by email on press@cma.gov.uk or by phone on 020 3738 6460.

Published 13 March 2024

MIL OSI United Kingdom