Leases already in existence prior to 30 June 2022

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Certain rent review clauses in the Leases of Taylor Wimpey and Countryside leasehold homes were declared unlawful

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As part of enforcement action launched in September 2020 by them against Taylor Wimpey, Countryside Properties, Barratt Developments and Persimmon Homes, the Competition and Markets Authority (“CMA”) informed Taylor Wimpey and Countryside Properties that the use in their Leases of rent review clauses which provide for the Ground Rent to double every 10 or 15 years broke consumer protection law.

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The 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.”

 

The following table graphically illustrates the issue. It is based upon a Lease for a term of 125 years at an initial Ground Rent of £250 per annum and with doubling reviews every 10 years:

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Column Y = Year of the Lease Term

 

Column GR = Ground Rent Payable 

per annum

 

Column V = Value of Ground Rent 

to Landlord over each 10 year period

 

 

Y          GR                       V

 

1          £250                £2.500

10        £500                £5,000

20        £1,000             £10,000

30        £2,000             £20,000

40        £4,000             £40,000

50        £8,000             £80,000

60        £16,000           £160,000

70        £32,000           £320,000

80        £64,000           £640,000

90        £128,000         £1,280,000

100      £256,000         £2,560,000

110      £512,000         £5,120,000

120      £1,024,000      £5, 120,000

 

Total value                  £15,357,500

To Landlord

 

 

Undertakings now received by the Competition and Markets Authority (“CMA”)

 

The CMA launched an initial investigation into the Leasehold Housing market in June 2019, and in September 2020 opened cases in relation to possible breaches of consumer protection law in the Residential Leasehold. 

 

They expressed concern about possible instances of mis-selling and potential unfairness of certain Leasehold contract terms

 

The CMA had specific concerns about the potential unfairness of terms that double Ground Rent every 10 or 15 years

 

 

Taylor Wimpey

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The CMA have confirmed that on 22 December 2021 Taylor Wimpey formally committed to make changes for the benefit of leaseholders. Taylor Wimpey will remove from leasehold contracts certain clauses which caused the Ground Rents payable by leaseholders to double in price every 10 years. It will also address lease terms which were originally doubling clauses but were converted into RPI-based ground rent terms. The Ground Rent for affected Taylor Wimpey leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

 

Where Taylor Wimpey has sold the freehold, and cannot remove the doubling or RPI clauses itself, then it will help get them removed at no cost to leaseholders. This will involve liaising with the current freeholder and making a financial contribution where the freeholder gives formal commitments to the CMA to remove the clauses. Taylor Wimpey also confirmed that it has stopped selling properties with doubling Ground Rent clauses and will provide people with upfront information about the annual costs of buying a home

 

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Leases originally granted by Taylor Wimpey but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking):

 

• Island Apartments Freehold Limited (13.3.24)

• Madison Close Freeholders Limited (13.3.24)

• Plaza 2 Surbiton Limited (13.3.24)

• BDP Freehold Limited (24.8.22)

• Bessant Properties Limited (24.8.22)

• Brigante Properties Limited

• Furatto Limited and Long Term Reversions No 1 Limited (24.8.22)

• Mortgage Incentive Funds Limited (24.8.22)

• Sarum Properties Limited (24.8.22)

• Taylor Court Limited (24.8.22)

• The Bridges (Darlington) Management Company Limited (24.8.22)

 

The general nature of the commitments given in respect of Taylor Wimpey Leases are to remove clauses which caused the Ground Rents payable by leaseholders to double in price every 10 years.

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Where applicable, the Freeholders will also remove terms which were originally doubling clauses but were converted into RPI-based Ground Rent terms and will repay many homeowners who were affected by these doubling Ground Rent clauses. The Ground Rent for affected leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

 

If you are a Leaseholder on a development built by Taylor Wimpey and Taylor Wimpey remain your Landlord, or you now have any of these businesses as your Landlord, and 

 

• your Lease contains review clauses which require the Ground Rent to double every 10 or 15 years 

• or it did, but such clause has been converted to an RPI review

 

then you should be making contact with them to find out what arrangements they have put in place to comply with such undertaking and to vary your Lease accordingly, rather than wait for them to contact you

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Countryside

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The CMA have confirmed that on15 September 2021 Countryside formally committed to make changes for the benefit of leaseholders. Countryside will remove from leasehold contracts certain clauses which caused the Ground Rents payable by leaseholders to double in price every ten or fifteen years. It will also remove terms which were originally doubling clauses but were converted into RPI-based ground rent terms. The Ground Rent for affected Countryside leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

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Where Countryside has sold the Freehold, and cannot remove the doubling clauses itself, then it will help get them removed at no cost to leaseholders. This will involve liaising with the current freeholder and making a financial contribution where the freeholder gives formal commitments to the CMA to remove the clauses. Countryside also confirmed that it has stopped selling properties with doubling Ground Rent clauses and has agreed to provide people with more upfront information about the annual costs of buying a home.

 

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Leases originally granted by Countryside but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking)

 

• Abacus Land (Holdco 1) Limited (13.3.24)

• D.A.T.S. (Holdings) Limited (24.8.22)

• Wallace Estates Limited (24.8.22)

• Adriatic Land 3 Limited (18.3.22)

• Brigante Properties Limited (18.3.22)

• Chris Allnutt and Company Management Limited (18.3.22)

• Claycourt Limited (18.3.22)

• Great Places Housing Association (18.3.22)

• London and Quadrant Housing Trust (18.3.22)

• Mann Island Properties Limited (18.3.22)

• Notting Hill Genesis (18.3.22)

• Penult 101 Limited (18.3.22)

• Poplar Housing and Regeneration Community Association Limited (18.3.22)

• RG Reversions 2014 Limited (18.3.22)

• RMB 102 Limited (18.3.22)

• SF Ground Rents No 15 Limited (18.3.22)

• Tapestart Limited (18.3.22)

• Weathercourt Limited (18.3.22)

 

 

The general nature of the commitments given in respect of Countryside Leases is to remove clauses which caused the Ground Rents payable by leaseholders to double in price every ten or fifteen years. Where applicable, the freeholders will also remove terms which were originally doubling clauses but were converted into RPI-based Ground Rent terms and will repay homeowners who were affected by these doubling Ground Rent clauses. The Ground Rent for affected leaseholders will remain at the amount it was when the property was first sold and will not increase over time

 

If you are a Leaseholder on a development built by Countryside and Countryside remain your Landlord, or you now have any of these businesses as your Landlord, and 

 

• your Lease contains review clauses which require the Ground Rent to double every 10 or 15 years 

• or it did, but such clause has been converted to an RPI review

 

then you should be making contact with them to find out what arrangements they have put in place to comply with such undertaking and to vary your Lease accordingly, rather than wait for them to contact you

 

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Leases originally granted by Redrow but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking)

 

• Adriatic Land 3 Limited (13.3.24)

 

 

Leases originally granted by Miller Homes but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking)

 

• Adriatic Land 3 (13.3.24)

• Abacus Land 4 Limited (13.3.24)

 

 

Leases originally granted by Crest Nicholson but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking)

 

• RMB 102 Limited (13.3.24)

 

 

Leases originally granted by Vistry but where the Freehold has been sold

 

Current Freeholder/Landlord and (date of Undertaking)

 

• Space in London Limited

 

N.B. Vistry 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.

 

If you are a Leaseholder on a development built by any of these other developers mentioned above and 

 

• your Lease contains review clauses which require the Ground Rent to double every 10 or 15 years 

• or it did, but such clause has been converted to an RPI review

 

then you should be making contact with such Developer or your current Landlord to find out what arrangements they have put in place to ensure compliance with such undertaking and to vary your Lease accordingly, rather than wait for them to contact you

 

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Aviva and Persimmon

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The CMA have confirmed that on 23 June 2021 Aviva and Persimmon had formally committed to make changes for the benefit of leaseholders. Aviva will remove from leasehold contracts certain clauses which were doubling the Ground Rents payable by Leaseholders. It will also remove terms which were originally doubling clauses and have been converted into RPI-based Ground Rent terms and repay homeowners who were affected by these doubling Ground Rent clauses.

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If you are a Leaseholder on a development built where Aviva your Landlord and 

 

• your Lease contains review clauses which require the Ground Rent to double every 10 or 15 years 

• or it did, but such clause has been converted to an RPI review

 

then you should be making contact with them to find out what arrangements they have put in place to comply with such undertaking and to vary your Lease accordingly, rather than wait for them to contact you

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Persimmon will offer leasehold house owners the option to buy the freehold of their property at a discount, better reflecting what they expected when they originally bought their house, and to make repayments to certain homeowners who have already purchased their freeholds. Persimmon has also agreed to extend the timeframe that prospective buyers are given to exchange contracts after reserving a property, and to provide people with more upfront information about the annual costs of buying a home.

 

 

You can see the full press release issued by the CMA (and links to the actual undertakings given by each Developer/Freeholder referred to above) via this link:

 

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You can find a sample Undertaking via this link:

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For any Leaseholder affected by any of the above, a pro-active approach has to be the best way forward

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A reminder:

 

New Leases or leases granted from 30 June 2022

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The Leasehold Reform (Ground Rent) Act 2022 came into force on 30 June 2022.

It restricts the Ground Rent payable under new long residential Leases (with certain limited exceptions) to a peppercorn (i.e. there will be no financial payment as Ground Rent)

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​In the cases of new long leases of retirement homes (i.e. those where occupation is restricted to persons aged 55 or over) the provisions of the Act came into force on the 1st April 2023

 

 

 

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