The Competition and Markets Authority has today forced Countryside Properties plc to strike out doubling ground rent terms even in leases where it has flogged on the freehold.
This means that ground rents designed to double every 10 or 15 years will no longer increase and will remain at the amount charged when cheated customers first bought their homes.
Countryside Properties plc was one of the most enthusiastic developers deploying doubling ground rents and were selling them at their north London The Mount scheme as late as May 2017 – long after Taylor Wimpey and other players had dumped them.
The gaming of ground rents also saw Countryside Properties plc being banned from developing within Liverpool.
The action against Countryside Properties plc (‘Places people love’) is another significant achievement by the CMA – announced the day before the leaseholders’ rally at Parliament tomorrow, 1pm September 16.
Communities Secretary Robert Jenrick repeated the government commitment to reduce new ground rents to zero (below).
Of course, the CMA adds:
“For the avoidance of doubt, these undertakings [by Countryside Properties plc] do not amount to an admission, express or implied, that any person has infringed the law.”
Countryside Properties plc’s cave-in comes after Persimmon Homes offered leasehold house owners the opportunity to buy their freehold at a discounted price after the CMA probed their sales practices.
“The effect of these increases [in ground rent], which kick in every 10 to 15 years, is that people often struggle to sell or mortgage their home and their property rights can be at risk, for example, if they fall behind on their rent,” the CMA said.
The Countryside Properties plc website boasts of its “5-star customer satisfaction rating” from the developers’ lobbying body the Home Builders Federation – which always denied that doubling ground rents were an issue of any concern at all.
The move comes after the CMA launched enforcement action against four housing developers in September 2020. These were Countryside and Taylor Wimpey, for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes. The CMA has already secured commitments from Persimmon and Aviva as part of this action, helping thousands of leaseholders..
As part of its review of the leasehold sector, the CMA is continuing to investigate investment groups Brigante Properties, and Abacus Land and Adriatic Land (prop: Will Astor), after it wrote to the firms earlier this year setting out its concerns and requiring them to remove doubling ground rent terms from their contracts.
Andrea Coscelli, Chief Executive of the CMA, said:
“Leaseholders with Countryside can now breathe a sigh of relief knowing they will no longer be forced to pay these doubling ground rents.
“No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property. We will continue to robustly tackle developers and investors – as we have done over the past 2 years – to make sure that people aren’t taken advantage of.
“Other developers, such as Taylor Wimpey, and freehold investors now have the opportunity to do the right thing by their leaseholders and remove these problematic clauses from their contracts. If they refuse, we stand ready to step in and take further action – through the courts if necessary.
“This is the kind of issue that could be resolved at pace and met with fines if the CMA receives the consumer powers that the Government is currently consulting on.”
Housing Secretary Robert Jenrick said:
“We asked the CMA to investigate the use of unfair practices in the housing market, such as doubling ground rents – and I welcome their continued success in bringing justice to homeowners.
“This settlement with Countryside will mean thousands more leaseholders are given the fair treatment they deserve and marks the third major agreement with leading UK developers and investors. I strongly urge others to follow suit and end these historic practices.
“We will continue to support leaseholders who may have been mis-sold properties and our new legislation will put an end to this practice for future homeowners, by restricting ground rents in new leases to zero.”