In the summer of 2019, the Competition and Markets Authority (CMA) began investigating potential breaches of consumer protection law in the leasehold housing market. In particular, the CMA was concerned about the potential mis-selling of leasehold properties and onerous and unfair contract terms in relation to ground rents, service charges and fees charged for consents and licences.
The CMA has announced that it has secured undertakings from:
• Insurance company Aviva to remove from leases clauses that were doubling the ground rents payable every 10 to 15 years. Some doubling ground rent clauses were converted into RPI-based ground rents; these will also be removed. The ground rent will revert to that payable at the grant of the lease and will not increase. Aviva has agreed to repay homeowners the excess money they have paid pursuant to a doubling ground rent clause.
• Housing developer Persimmon Homes to offer leasehold house owners the option to buy their freehold at a discount so that they are in a position more akin to that which they expected when they bought their house. Persimmon will make repayments to certain homeowners that have already bought their freehold. Prospective buyers will be given longer reservation periods to reduce the pressure to make a quick decision, and more information upfront about the annual costs of owning the property.
The CMA considers this to be a “real win” for thousands of leaseholders. It expects other investors and housing developers to follow Aviva’s and Persimmon’s lead or face legal action from the CMA.
If you would like to speak to our team regarding any issues around leasehold properties please call on 01256 320555 or email email@example.com.