Developer Countryside Properties has struck out terms meaning ground rents double every 10 to 15 years, after a watchdog’s instruction
Leaseholders’ ground rents will stay at the amount charged when they first bought their home, following action by the Competition and Markets Authority (CMA).
The Big Four developer has voluntarily given formal commitment to removing the terms, which made it difficult for people to sell or mortgage their homes.
It will also remove terms that were initially doubling clauses but converted so the ground rent increased in line with the Retail Prices Index (RPI).
The CMA said the original terms may have been unfair and should not have been replaced with another term increasing ground rent.
The developer has not sold leasehold properties with doubling ground rent clauses since 2017.
“No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property,” Andrea Coscelli, chief executive of the CMA, said.
Countryside said it expected to make a further provision of £5m, as well as a £10m provision previously announced for a ground rent assistance scheme.
Iain McPherson, chief executive of Countryside, said: “Countryside has engaged extensively and constructively with the CMA throughout the course of its review to reach this positive outcome for affected leaseholders.”
The CMA called on other developers, including Taylor Wimpey, and freehold investors to “do the right thing” and remove such clauses from contracts.
“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,” Coscelli added.
Housing Secretary Robert Jenrick urged other developers to follow suit and end such practices and said new legislation would restrict ground rents in new leases to zero.
A number of housing developers were hit with enforcement action from the CMA in September 2020.
Developers Countryside and Taylor Wimpey were pulled up for using possibly unfair contract terms while Barratt Developments and Persimmon Homes were checked for possible mis-selling of leasehold homes.