Yahoo Finance Taylor Wimpey drops 'unfair' contracts that double ground rents every decade
Taylor Wimpey will drop “unfair” terms in leasehold contracts that double ground rents every decade following an investigation by the competition watchdog.
The housebuilder will end the increases and return to the amount charged when the property was purchased, the Competition and Markets Authority said on Wednesday.
The agreement comes more than a year after the CMA began investigating Taylor Wimpey along with Persimmon, Barratt Developments and Countryside Properties over ground rents.
Countryside said in September it would stop using the terms, while Persimmon and Aviva, which invested in freeholds from developers, said in June they would remove ground rent terms. Barratt is yet to reach an agreement with the regulator.
Taylor Wimpey said it would contact all customers affected in the new year.
Pete Redfern, the chief executive, said: “Taylor Wimpey has always sought to do the right thing by its customers, shareholders and other stakeholders, and we are pleased that today's voluntary undertakings will draw this issue to a full close, within our original financial provision.”
Taylor Wimpey did not expect any financial hit from the move as it had made provisions in 2017. Shares rose 1.2pc.
Andrea Coscelli, chief executive of the Competition and Markets Authority, said: “This is a huge step forward for leaseholders with Taylor Wimpey, who will no longer be subject to doubling ground rents.
“These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage. I hope the news they will no longer be bound into these terms will bring them some cheer as we head into Christmas.”
Mr Coscelli also called on Barratt to resolve its ground rent issues.
“Other developers and freehold investors should now do the right thing for homeowners and remove these problematic clauses from their contracts,” he said.
“Only the investigation into Barratt Developments is still ongoing. This is the kind of issue that could be resolved at pace and met with fines if the CMA receives the consumer powers that the Government is currently consulting on.”
Barratt declined to comment.
Michael Gove, the Levelling Up Secretary, said: “Unfair practices, such as doubling ground rents, have no place in our housing market - which is why we asked the CMA to investigate and I welcome their success in holding these major industry players to account.
“This settlement will help to free thousands more leaseholders from unreasonable ground rent increases and other developers with similar arrangements in place should beware, we are coming after you.
“We continue our work to protect and support all leaseholders and our legislation to restrict ground rents in new leases to zero will put a stop to such unfair charges for future homeowners once and for all.”
