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Nicola Laver

Editor, Solicitors Journal

Developers ordered to change unfair lease terms

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Developers ordered to change unfair lease terms

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Two major housebuilders have been told by the competition regulator to change unfair lease terms 

Two major housebuilders have been told by the competition regulator to change unfair lease terms.

The Competition and Markets Authority (CMA) wrote last week to Countryside and Taylor Wimpey to remove leasehold terms that would require leaseholders to pay ground rents that double every 10 or 15 years.

They were also told to agree not to use such terms in future leasehold contracts.

Jonathan Frankel, litigation partner at Cavendish Legal Group, said: “Today’s action by the CMA will be seen as a welcome move by all those leaseholders who feel trapped and unable to sell their property due to unfair escalating ground rents.”

He added that it sends a key message that “leasehold terms are not written in stone”.

“Leaseholders need to be reminded that as consumers they have rights, and they have a legal option to reduce these rents to zero”, said Frankel. 

The CMA’s action follows the start of wider enforcement action against four housing developers. The other two companies are Barratt Developments and Persimmon Homes over potential mis selling of leasehold homes.

The regulator is also investigating firms, such as investment companies, which bought freeholds from the four developers and have continued to use the same leasehold contract terms.

Frankel described this as “positive news for leaseholders” given that contract terms pass onto the leaseholder.

“We await the full outcome of the investigation and hope it will lead to the next generation of leaseholders being able to buy their homes, without the spectre of escalating ground rents hanging over them,” he commented.