Leasehold

The CMA is investigating potential breaches of consumer protection law in the leasehold housing market.

From:
Competition and Markets Authority
Published
11 June 2019
Last updated
13 March 2024 — See all updates
Case type:
Consumer enforcement
Case state:
Open
Market sector:
Building and construction and Distribution and service industries
Outcome:
Consumer enforcement - undertakings
Opened:
11 June 2019

Find out more about what we are doing to help people get a fair deal as they face the rising cost of living.

This update covers our recent work on road fuel prices, groceries, infant formula, vet services, online shopping and housing.

Response to government consultation on ground rent cap and further undertakings accepted

Consultation response

13 March 2024: The CMA has responded to the Department for Levelling Up, Housing and Communities’ 2023 consultation Modern leasehold: restricting ground rent for existing leases. The CMA welcomes the consideration of further ground rent reforms by the government and continues to consider that statutory intervention may be necessary to protect consumers from ongoing problems associated with expensive ground rents.

Further developments

13 March 2024: Since our last update, there has been further progress in relation to leases with less than 20-year doubling clauses. A further 3 freeholders with affected Taylor Wimpey leases have provided the CMA with undertakings for the benefit of leaseholders:

An additional freeholder with affected Countryside leases has also now provided the CMA with undertakings to assist leaseholders:

Other national developers, Redrow, Crest Nicholson, Miller Homes and Vistry have all worked with freeholders who purchased their affected leases to secure improvements for leaseholders:

We do not intend to open any new ground rent cases or cases related to the mis-selling of leasehold homes at this stage. However, existing cases remain open. We will consider next steps in those cases in light of the government’s decision whether to cap ground rent.

Undertakings accepted from 9 more freeholders

24 August 2022: 9 more freeholders have committed to make changes for the benefit of leaseholders. This follows similar commitments given by Taylor Wimpey in December 2021.

The 9 freeholders had purchased Taylor Wimpey freeholds and have now given their commitment to remove clauses which caused the ground rents payable by leaseholders to double in price every 10 years.

Where applicable, the freeholders will also remove terms which were originally doubling clauses but were converted into RPI-based ground rent terms and will repay many homeowners who were affected by these doubling ground rent clauses. The ground rent for affected leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

The CMA is also engaging with a further 4 national developers – Crest Nicholson, Redrow, Miller Homes and Vistry – who have agreed to make similar beneficial changes and/or to work with the companies who purchased their freeholds to remove doubling terms, as applicable.

Following our update on 18 March 2022, the CMA has now concluded its discussions with 2 remaining freeholders who had purchased Countryside leases. Freeholders D.A.T.S. (Holdings) Limited and Wallace Estates Limited have now both given similar commitments to make changes for the benefit of leaseholders.

Freeholder Undertakings (Taylor Wimpey Leases):

Freeholder Undertakings (Countryside Leases):

The CMA is in ongoing discussions with 5 remaining freeholders with affected Taylor Wimpey leases: Plaza 2 Surbiton Limited, Island Apartments Freehold Limited and Madison Close Freeholders Limited, who have agreed in principle to provide undertakings, along with the Abacus Land and Adriatic Land investment group, and Elmdon Real Estate LLP.

Investigation update

16 August 2022: The CMA is positively engaging with firms who purchased freeholds from Taylor Wimpey in order to secure formal commitments from those freeholders to remove doubling clauses from their leases, and any doubling terms that were converted to be based on the Retail Price Index (RPI). This follows Taylor Wimpey’s commitment to the CMA to help get such clauses removed at no cost to leaseholders. The CMA will provide an update in due course.

Regarding its investigation into alleged mis-selling by Barratt Homes, the CMA has now closed its case. Following careful scrutiny of the evidence gathered, the CMA concluded that it was insufficient to support a clear legal case for the CMA to secure collective redress for Barratt leaseholders under its consumer law powers. This was unlikely to change with further investigation and consequently continuing with the case would not be a good use of resources. Barratt’s sales practices have changed, and they no longer sell leasehold houses.

Undertakings accepted from 15 more freeholders

18 March 2022: 15 more freeholders have committed to make changes for the benefit of leaseholders. This follows similar commitments given by Countryside in September 2021.

The 15 new freeholders who had purchased Countryside freeholds have now given their commitment to remove clauses which caused the ground rents payable by leaseholders to double in price every ten or fifteen years. Where applicable, the freeholders will also remove terms which were originally doubling clauses but were converted into RPI-based ground rent terms and will repay homeowners who were affected by these doubling ground rent clauses. The ground rent for affected leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

Freeholder Undertakings:

The CMA is in ongoing discussions with 2 remaining freeholders with affected Countryside leases: D.A.T.S. (Holdings) Limited, who have agreed in principle to provide undertakings, and Wallace Estates Limited.

Undertakings accepted from Taylor Wimpey

22 December 2021: Taylor Wimpey has formally committed to make changes for the benefit of leaseholders. Taylor Wimpey will remove from leasehold contracts certain clauses which caused the ground rents payable by leaseholders to double in price every 10 years. It will also address lease terms which were originally doubling clauses but were converted into RPI-based ground rent terms. The ground rent for affected Taylor Wimpey leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

Where Taylor Wimpey has sold the freehold, and cannot remove the doubling or RPI clauses itself, then it will help get them removed at no cost to leaseholders. This will involve liaising with the current freeholder and making a financial contribution where the freeholder gives formal commitments to the CMA to remove the clauses. Taylor Wimpey also confirmed that it has stopped selling properties with doubling ground rent clauses and will provide people with upfront information about the annual costs of buying a home.

Undertakings accepted from Countryside

15 September 2021: Countryside has formally committed to make changes for the benefit of leaseholders. Countryside will remove from leasehold contracts certain clauses which caused the ground rents payable by leaseholders to double in price every ten or fifteen years. It will also remove terms which were originally doubling clauses but were converted into RPI-based ground rent terms. The ground rent for affected Countryside leaseholders will remain at the amount it was when the property was first sold and will not increase over time.

Where Countryside has sold the freehold, and cannot remove the doubling clauses itself, then it will help get them removed at no cost to leaseholders. This will involve liaising with the current freeholder and making a financial contribution where the freeholder gives formal commitments to the CMA to remove the clauses. Countryside also confirmed that it has stopped selling properties with doubling ground rent clauses and has agreed to provide people with more upfront information about the annual costs of buying a home.

Undertakings accepted from Aviva and Persimmon; consultation letters issued to investment firms

23 June 2021: Aviva and Persimmon have formally committed to make changes for the benefit of leaseholders. Aviva will remove from leasehold contracts certain clauses which were doubling the ground rents payable by leaseholders. It will also remove terms which were originally doubling clauses and have been converted into RPI-based ground rent terms and repay homeowners who were affected by these doubling ground rent clauses.

Persimmon will offer leasehold house owners the option to buy the freehold of their property at a discount, better reflecting what they expected when they originally bought their house, and to make repayments to certain homeowners who have already purchased their freeholds. Persimmon has also agreed to extend the timeframe that prospective buyers are given to exchange contracts after reserving a property, and to provide people with more upfront information about the annual costs of buying a home.

The CMA has also written to investment groups, Brigante Properties, and Abacus Land and Adriatic Land, setting out its concerns and requiring them to remove doubling ground rent terms from their contracts. These investment groups now have the opportunity to respond to the CMA’s detailed concerns.

Consultation letters – Countryside Properties and Taylor Wimpey

19 March 2021: The CMA has issued consultation letters to two housing developers in relation to possible breaches of consumer protection law in the residential leasehold sector. These letters outline the CMA’s specific concerns about the potential unfairness of terms that double ground rent every 10 or 15 years and ask the developers to take steps to address these. Countryside Properties and Taylor Wimpey now have an opportunity to respond to the CMA’s detailed concerns.

Case opening

04 September 2020: The CMA has now opened cases in relation to possible breaches of consumer protection law in the residential leasehold sector. The CMA is concerned about possible instances of mis-selling and potential unfairness of certain leasehold contract terms. The CMA will now engage with relevant businesses to conduct further information gathering and seek to resolve these concerns.

In addition to this action, the CMA has also published some short videos and guides for consumers who may own or be buying a leasehold property:

Investigation update

28 February 2020: Today we published an update on our investigation. The update outlines our current thinking into whether there have been breaches of consumer protection law in the residential leasehold housing sector and next steps, including future enforcement action by the CMA and the need for legislative change.

Investigation launch

11 June 2019: The Competition and Markets Authority opened an investigation into the leasehold housing market. We will shortly be writing to a range of market participants to ask for information. The CMA is concerned about potential leasehold mis-selling, and whether leasehold contract terms are onerous and unfair in relation to ground rent, permission and other charges.

At this early stage, the CMA has not reached a view whether or not any person or company has broken consumer protection law.

Call for your views: now closed

If you wish to provide information to the CMA please use one or more of the following email addresses below:

In the heading of your email please indicate the address of the property about which you are getting in touch with the CMA and any other relevant material such as, should you be contacting us to make a complaint, the person against whom you wish to complain.

In your email please provide as much detail as you are comfortable with including timescales and dates, values and frequency of payments etc.

We would appreciate initial responses by 12 July.

Contacts

leasehold@cma.gov.uk

Director

Simon Jones

Updates to this page

Published 11 June 2019
Last updated 13 March 2024 + show all updates

  1. Response to government consultation on ground rent cap published, and further undertakings accepted.

  2. Undertakings accepted from 9 more freeholders published.

  3. Investigation updated.

  4. Undertakings from 15 new freeholders have been published to the page.

  5. Undertakings accepted from Taylor Wimpey and published on the page.

  6. Undertakings published.

  7. Undertakings accepted from Aviva and Persimmon; consultation letters issued to investment firms.

  8. The CMA has issued consultation letters to Countryside Properties and Taylor Wimpey. These are now published on the page.

  9. Opening case statement published.

  10. Project update report published.

  11. First published.

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