LATEST NEWS & UPDATES
 

MARCH 2024

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Leasehold Reform

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RESIDENTIAL LEASES WITH DOUBLING GROUND RENT REVIEWS ETC.

 

The Competition and Markets Authority (“CMA”) has now announced more undertakings it has received in relation to doubling Ground Rent Review provisions

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These are in addition to the various undertakings received by it from Developers and Freehold Owners  since June 2021

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It has been said that all affected leaseholders will now see their Ground Rents return to the original amount charged when the property was first sold, and it will not increase over time.

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Below sets out where things now stand as regards to the Undertakings 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.

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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 by them

 

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.

 

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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.

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 by them

 

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

 

 

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

 

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 by them

 

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 by them

 

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 by them

 

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.

 

 

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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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.

 

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To access the full CMA Press Release (and the links to the actual Undertakings given by the respective Developer/Freehold owner), follow this link:

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The CMA have also made the following comments:-

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• In relation to the Governments' Ground Rent Consultation - "we strongly support the steps already taken by the UK government to prohibit ground rents in new leases under the Leasehold Reform (Ground Rent) Act 2022 and we support the imposition of further restrictions on ground rent" 

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• In relation to Ground Rent Reviews linked to the Retail Price Index - "RPI clauses pose similar problems but have their own difficulties. We said in the Update “(a) homeowners may well not understand how an RPI increase is calculated (and this problem may be compounded by the drafting of the lease clause); (b) the quantum of an RPI based increase is uncertain; (c) it is unclear why in principle RPI is a suitable index by which the lease value of property, if such it is, should increase; (d) at an RPI increase of 3.7% over 20 years an RPI escalating clause produces an increase equivalent to a 20-year doubling clause.” 

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LEASEHOLD AND FREEHOLD REFORM BILL

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The Second Reading of this Bill in the House of Lords took place on the 27th March

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The Committee Stage of the Bill is scheduled to take place on the following dates:-

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22 April

24 April

29 April

1 May

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GOVERNMENT DROP PLANS TO REDUCE ALL GROUND RENTS TO A PEPPERCORN

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It has been reported (Sunday 24 March) that Michael Gove has been forced to drop plans to reduce all Ground Rents to a peppercorn after opposition from the Treasury and the PM

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