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Countryside scraps leasehold ground rent rises Countryside Properties scraps leasehold ground rent rises
(about 1 hour later)
Thousands of leaseholders who bought homes from a major housebuilder will no longer be subjected to ground rents that double every 10 or 15 years.Thousands of leaseholders who bought homes from a major housebuilder will no longer be subjected to ground rents that double every 10 or 15 years.
Countryside Properties agreed to remove contract terms that cause ground rents to double in price, after a probe by the Competition and Markets Authority. Countryside Properties will keep rents at the same level as when they first bought their home after a probe by the Competition and Markets Authority.
It means affected leaseholders' ground rents will remain at the amount charged when they first bought their homes. Countryside is the latest housebuilder to scrap the "unfair" contract terms.
The watchdog said leaseholders could breathe a "sigh of relief". Millions of buyers signed leasehold contracts that campaigners say make homes impossible to mortgage or sell.
Andrea Coscelli, chief executive of the CMA, said: "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 two years - to make sure that people aren't taken advantage of."
Countryside Properties also confirmed it no longer sells leasehold homes with doubling ground rents. It will also remove terms which converted clauses which meant ground rent increased in line with the Retail Prices Index (RPI).
The effect of rises in ground rents, which kick in every 10 to 15 years, can lead to people struggling to sell or mortgage their homes. Their property rights can also be at risk if, for example, they fall behind on their rent.
The commitment from Countryside comes after the CMA launched enforcement action against four housing developers in September 2020.
In June, housebuilder Persimmon agreed for its leaseholders to buy the freehold of their property at a discount. Aviva, which buys leaseholds from house builders, also pledged to repay homeowners who saw their ground rents double.
The regulator launched its investigation into leaseholds in 2019 because it was worried that leaseholders were facing huge and unexpected increases in the cost of buying a freehold or massive increases in ground rents.The regulator launched its investigation into leaseholds in 2019 because it was worried that leaseholders were facing huge and unexpected increases in the cost of buying a freehold or massive increases in ground rents.
Andrea Coscelli, chief executive of the CMA said Countryside leaseholders could breathe a "sigh of relief".
"No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property," she said.
"We will continue to robustly tackle developers and investors - as we have done over the past two years - to make sure that people aren't taken advantage of."
Some of the biggest names in property have changed their terms, while others remain under investigation.
In June, Persimmon agreed for its leaseholders to buy the freehold of their property at a discount, while Aviva, which buys leaseholds from house builders, pledged to repay homeowners who saw their ground rents double.
Katie Kendrick, founder of the National Leasehold Campaign (NLC), said the changes would help people "escape onerous ground rents that make their homes unmortgageable and unsellable".
"We are delighted that Countryside are the next domino to fall in this whole sorry saga of doubling ground rents," she added.
What is a leasehold?What is a leasehold?
With a leasehold, the person owns a lease which gives them the right to use the property. But they still have to get their landlord's permission for any work or changes to their homes. With a leasehold, the person owns a lease which gives them the right to use the property, but they still have to get their landlord's permission for any work or changes to their homes.
When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, typically between 99 and 125 years, but sometimes up to 999 years - although people may extend their lease or buy the freehold.When a leasehold flat or house is first sold, a lease is granted for a fixed period of time, typically between 99 and 125 years, but sometimes up to 999 years - although people may extend their lease or buy the freehold.
But leasehold house owners are often charged expensive ground rent as well as fees if they want to make changes to their homes. A leasehold house can also be difficult to sell. However, leasehold house owners are often charged expensive ground rent as well as fees if they want to make changes to their homes. A leasehold house can also be difficult to sell.
As part of its review of the leasehold sector, the CMA is investigating investment groups Brigante Properties, Abacus Land and Adriatic Land. Its investigation into Barratt Developments and Taylor Wimpey is also continuing. There were an estimated 4.6 million leasehold dwellings in England between 2019 and 2020, which equated to 19% of the English housing stock. More than two thirds (3.2 million) of the leasehold dwellings in were flats and 1.5 million were houses, official figures said.
The effect of rises in ground rents, which kick in every 10 to 15 years, can lead to people struggling to sell or mortgage their homes. Their property rights can also be at risk if, for example, they fall behind on their rent.
Countryside Properties confirmed it no longer sells leasehold homes with doubling ground rents. It will also remove terms which converted clauses which meant ground rent increased in line with the Retail Prices Index (RPI).
Iain McPherson, chief executive of Countryside, said the housebuilder had "engaged extensively and constructively with the CMA throughout the course of its review to reach this positive outcome for affected leaseholders".
The commitment from Countryside comes after the CMA launched enforcement action against four housing developers in September 2020.
'Do the right thing'
As part of its review of the leasehold sector, the CMA is still investigating investment groups Brigante Properties, Abacus Land and Adriatic Land. Its investigation into Barratt Developments and Taylor Wimpey is also continuing.
Ms Coscelli said Taylor Wimpey and freehold investors had the "opportunity to do the right thing" to remove "problematic clauses from their contracts".Ms Coscelli said Taylor Wimpey and freehold investors had the "opportunity to do the right thing" to remove "problematic clauses from their contracts".
"If they refuse, we stand ready to step in and take further action - through the courts, if necessary," she said."If they refuse, we stand ready to step in and take further action - through the courts, if necessary," she said.
NCL co-founder Jo Darbyshire, who lives in a Taylor Wimpey house that was sold in 2010 with ground rent of £295, doubling every 10 years, said the it was "about time" the housebuilder "do the right thing and match what Countryside are doing".
Taylor Wimpey declined to the comment when contacted by the BBC.
Housing secretary Robert Jenrick said the agreement with Countryside would mean thousands of leaseholders would be "given the fair treatment they deserve".Housing secretary Robert Jenrick said the agreement with Countryside would mean thousands of leaseholders would be "given the fair treatment they deserve".
He said new legislation would "put an end to this practice" by housebuilders for future homeowners, by setting ground rents in new leases at zero.He said new legislation would "put an end to this practice" by housebuilders for future homeowners, by setting ground rents in new leases at zero.