Leaseholders of housebuilder Taylor Wimpey will no longer be subject to ground rents that double every ten years after action by competition watchdog.
The Competition and Markets Authority (CMA) chief executive Andrea Coscelli said the decision was “a huge step forward” for its leaseholders.
Taylor Wimpey voluntarily gave formal commitments to remove the terms from leasehold contracts and exclude them from new contracts.
The move will impact thousands of households, and has now removed the barrier that meant that people often struggled to sell or obtain a mortgage on their home.
Coscelli described the ground rent rises as “totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage”.
He added: “Other developers and freehold investors should now do the right thing for homeowners and remove these problematic clauses from their contracts.
The move comes after the CMA launched enforcement action against 4 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. As part of this action, the CMA has already helped thousands of leaseholders by securing commitments from Countryside and Persimmon, as well as from an investor in freeholds, Aviva.
Due to the CMA’s action, affected Taylor Wimpey leaseholders will now see their ground rents remain at the original amount – i.e. when the property was first sold – and they will not increase over time. Taylor Wimpey has also confirmed to the CMA that it has stopped selling leasehold properties with doubling ground rent clauses.
Pete Redfern, chief exec at Taylor Wimpey, said: “Taylor Wimpey has always sought to do the right thing by its customers, shareholders and other stakeholders, and we are pleased that today’s voluntary undertakings will draw this issue to a full close, within our original financial provision.”