(Sharecast News) - The UK's competition watchdog has ordered Taylor Wimpey and Countryside to tear up onerous ground rent terms that have left many leaseholders trapped in their homes.
The Competition and Markets Authority said the housebuilders' imposition of ground rents that double every 10 or 15 years breaks consumer protection law. It has told the companies to remove the unfair terms from all existing properties and to agree not to use them in future leasehold contracts.
Taylor Wimpey shares fell 1% to 182.95p at 08:49 GMT and Countryside shares dropped 0.95% to 519.5p.
The CMA has been examining potentially unfair terms for leaseholders for almost two years in response to a public outcry over escalating ground rents and high charges. It is also investigating Persimmon and Barratt Developments over the possible mis-selling of leasehold homes.
Andrea Coscelli, the CMA's chief executive, 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. Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure that they are on the right side of the law."
The CMA said it would take Taylor Wimpey and Countryside to court if the companies did not carry out its instructions. The regulator said it was still scrutinising Persimmon and Barratt and would deal with investment companies that bought unfair freeholds from developers.
Countryside said it had not sold properties with doubling ground rent clauses since 2017 and was helping leaseholders whose ground rent doubled more frequently than every 20 years.
"We will continue to engage constructively with the CMA to resolve this complex issue," Countryside said. "Alongside these discussions, its resolution will require the engagement of a number of other parties, including certain freehold owners, for a satisfactory solution to be found.
Taylor Wimpey said: "We have now received a letter from the CMA setting out its concerns and confirming that it intends to move to the next stage of formal consultation. We will continue to cooperate with the CMA and work with them to find a satisfactory resolution, within the required timescale."
11 Nov 2022 11:56
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