Unfair Contract Terms In Leasehold Properties
Housebuilders Countryside and Taylor Wimpey have been told they must remove certain leasehold terms by the UK competition watchdog, or they will face legal action.
The Competition and Markets Authority (CMA) has said that they had unfair terms, which meant that ground rent would be doubled every 10 to 15 years. Andrea Coscelli, chief executive of the CMA, said “These ground rent terms can make it impossible for people to sell or get a mortgage on their homes, meaning they find themselves trapped. This is unacceptable.”
There were concerns raised that the clauses in the contracts for Countryside and Taylor Wimpey may break consumer protection law. These must be removed from existing contracts to ensure that they are on the right side of the law. The businesses have been given the opportunity to sign formal commitments, known as undertakings, to remove the terms from contracts.
This investigation comes after two other housebuilders, Barratt and Persimmons, were uncovering evidence that buyers of leasehold properties were misled and charged excessive fees in September 2020.
Taylor Wimpey have put out a statement saying, “We will continue to cooperate with the CMA and work with them to find a satisfactory resolution, within the required timescale.” They also added that they stopped selling leases that doubled ground rent every 10-15 years back in January 2012.
Countryside responded saying they have “sold no properties with doubling ground rent clauses since 2017”.
These two-house builders have been classed by the National Leasehold Campaign (NLC) as the worst offenders in the leasehold scandal. The founder of the NLC Katie Kendrick has praised the CMA’s stance on the investigation.
What is the difference between a freehold and a leasehold? Read our previous blog here to find out more https://www.larcomes.co.uk/leasehold-reforms-2021/
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