CMA demands ground rent overhaul from Countryside and Taylor Wimpey

The Competition and Markets Authority has told housebuilders Countryside Properties and Taylor Wimpey to remove “unacceptable” ground rent contract terms for leaseholders, saying they may break consumer protection law. The watchdog said it was singling out the companies’ use of terms that “double the ground rent every 10 or 15 years”, saying: “As this increase is built into contracts, it means people can struggle to sell or mortgage their homes, and so find themselves trapped. These terms can also affect their property rights.” The CMA added that it has demanded the removal of such terms from contracts issued by both companies and that they “must also agree not to use the terms again in any future leasehold contracts”. Andrea Coscelli, CMA chief executive, said: “These ground rent terms can make it impossible for people to sell or get a mortgage on their homes, meaning they find themselves trapped. This is unacceptable. Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure that they are on the right side of the law. If these developers do not address our concerns, we will take further action, including through the courts, if necessary.” Housing secretary Robert Jenrick said: “The government is pursuing the most significant reforms to leasehold in 40 years, including by protecting future homeowners, restricting ground rents in new leases to zero and ending the use of leasehold in new houses altogether.” Countryside and Taylor Wimpey are now able to respond to the CMA’s concerns and avoid court action by signing formal commitments to remove the ground rent terms from leasehold contracts. In its own statement on the matter, Taylor Wimpey said: “As we noted in our FY2020 results announcement on 2 March, the CMA’s investigation into leasehold remains open and we have now received a letter from the CMA setting out its concerns and confirming that it intends to move to the next stage of formal consultation. We will continue to co-operate with the CMA and work with them to find a satisfactory resolution within the required timescale.” Countryside said in a separate statement: “Countryside has sold no properties with doubling ground rent clauses since 2017 and we introduced the Ground Rent Assistance Scheme in 2020 to assist leaseholders whose ground rents doubled more frequently than every 20 years. “We will continue to engage constructively with the CMA to resolve this complex issue. Alongside these discussions, its resolution will require the engagement of a number of other parties, including certain freehold owners, for a satisfactory solution to be found.” The CMA’s latest statement comes after it launched enforcement action last September  against Countryside and Taylor Wimpey for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes. In its statement today, the CMA said the investigation into Barratt and Persimmon is ongoing. To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette