Following an investigation by the UK’s markets watchdog, housebuilder Persimmon and financial services group Aviva have agreed to overhaul their leasehold contracts to make payments fairer for homeowners.
The Competition and Markets Authority (CMA) investigation into Persimonn’s leaseholds pushed the housebuilder to cap the price of freehold at £2,000 in its Right to Buy scheme until 31 December 2026.
The Persimmon group has agreed to reimburse customers who previously, under the Right to Buy scheme, paid more than £2,000 – providing they still own their freehold.
The discount ‘better reflects’ what customers expected when they originally bought their house, the CMA said in a statement.
“It will also make repayments to certain homeowners who have already purchased their freeholds,” the watchdog added.
“[Customers] were led to believe they could buy their freehold at a certain price, only to find out later that this price had increased by thousands of pounds with no warning.”
The chief executive of the CMA, Andrea Coscelli, said: “This is a real win for thousands of leaseholders – for too long people have found themselves trapped in homes they can struggle to sell or been faced with unexpectedly high prices to buy their freehold. Now, they can breathe a sigh of relief knowing things are set to change for the better.”
Persimonn’s will also extend its reservation period for home buyers from 35 days to 42 days, to avoid customers being ‘pressured’ into making a decision to exchange contracts after reserving a property.
“Today’s agreement further demonstrates Persimmon’s determination to operate with integrity as we continue to build a business with a long-term, responsible and sustainable future,” CEO Dean Finch said.
The housebuilding group has made no admission of wrongdoing, it said in a statement, while the group stopped selling leasehold houses in 2017 and introduced the Right to Buy program the same year.
“Building on our existing Right to Buy scheme, this agreement provides a fair deal for all leaseholders of Persimmon built houses, extending the opportunity to purchase their freehold at a price well below market value,” Finch added.
The CMA’s probe has resulted in Aviva agreeing to remove ground rent terms that were considered unfair and repay homeowners who saw rents doubled.
The watchdog also wrote to Countryside and Taylor Wimpey in March warning them they could be breaking the law if they continue to include deeply unfair ground rent terms in contracts for new homes.
Housing secretary Robert Jenrick said: “The government asked the CMA to conduct this investigation – and I welcome their efforts to bring justice to homeowners affected by unfair practices, such as doubling ground rents, which have no place in our housing market.
“This settlement with Aviva and Persimmon is a hugely important step and demonstrates our commitment to support existing leaseholders who may have been mis-sold properties.”