* Builders say they will continue engaging with CMA
* Taylor Wimpey, Countryside shares fall about 2%
* CMA's probe into Barratt, Persimmon ongoing
(Adds analyst comment, Countryside response, shares)
By Aby Jose Koilparambil
March 19 (Reuters) - British homebuilders Taylor Wimpey
and Countryside Properties must remove contract
terms that lock leaseholders into rents that double every 10 or
15 years, the UK's Competition and Markets Authority ruled on
Friday.
"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," CMA Chief Executive
Andrea Coscelli said.
The two homebuilders can respond to the watchdog's concerns
and avoid court action by signing formal commitments known as
"undertakings" to remove the ground rent terms from their
leasehold contracts.
Shares in Taylor Wimpey and Countryside fell as much as 2%
and 1.8%, respectively, lagging a FTSE 100 market down
as much as 1.3%.
"Both companies have made provisions to redress this
problem," said Christopher Millington, equity analyst at Numis
Securities.
"It is impossible to rule out any more financial impact
arising from the same issue but I don't think that would be
particularly material."
Taylor Wimpey, the UK's third-largest homebuilder, said it
intended to move to the next stage of formal consultation and
would continue to cooperate with the regulator.
Countryside said it had sold no properties with doubling
ground rent clauses since 2017 and introduced the ground rent
assistance scheme in 2020 to assist leaseholders whose ground
rents doubled more frequently than every 20 years.
Countryside said it would continue to engage constructively
with the CMA.
The CMA has said it would take further action including
judicial proceedings if Taylor Wimpey and Countryside did not
address its concerns.
It CMA launched last September launched its investigation
into builders Barratt Developments, Persimmon Homes
, Taylor Wimpey and Countryside in relation to possible
mis-selling of leasehold homes and high ground rents.
Its probe into Barratt, Persimmon is ongoing.
(Reporting by Aby Jose Koilparambil in Bengaluru; editing by
Arun Koyyur and Jason Neely)