Taylor Wimpey has confirmed it will drop contract terms which lock leaseholders into ground rents that double every decade.
The announcement marks the end of a lengthy probe into the housebuilder firm by the UK’s competition watchdog.
The Competition and Markets Authority said ground rents of affected Taylor Wimpey leaseholders will no longer increase and will remain at the amount charged when they first bought their home.
Dropped: Taylor Wimpey has confirmed it will drop contract terms which lock leaseholders into ground rents that double every decade
In a statement, Taylor Wimpey said it would ‘proactively contact’ all customers with historic doubling ground rent leases and freeholders who own historic doubling ground rent leases in early 2022. It has also established a dedicated online web page for anyone affected.
Taylor Wimpey has also confirmed to the CMA that it has stopped selling leasehold properties with doubling ground rent clauses.
Taylor Wimpey said the cost of dropping the clause falls within the provisions it earmarked to investors in 2017. The company also said its agreement with the regulator did not imply infringement of UK consumer law.
Pete Redfern, Tyalor Wimpey’s 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.’
Statement: Secretary of State for Levelling Up Michael Gove, said, ‘Unfair practices, such as doubling ground rents, have no place in our housing market’
Andrea Coscelli, chief executive of the CMA, 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.
‘Other developers and freehold investors should now do the right thing for homeowners and remove these problematic clauses from their contracts.
‘If they refuse, we stand ready to step in and take further action – through the courts if necessary.
‘Of the four developers against whom the CMA opened a case in September 2020 three have now settled with the CMA.
‘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.’
Summing up its findings on the lease clauses in question, the CMA said: ‘The CMA believes that the original doubling clauses were unfair terms and should therefore have been fully removed, not replaced with another term that increases the ground rent.’
Secretary of State for Levelling Up Michael Gove, 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.’
Shares in FTSE 100-listed Taylor Wimpey slipped in early morning trading and are currently down 0.27 per cent or 0.45p to 169.3p.
The CMA launched an investigation into Taylor Wimpey and some of its rivals back in September last year, filing cases against Barratt Developments, Persimmon and Countryside Properties, as well as Taylor Wimpey.
In September, Countryside agreed to drop similar terms, while in June, Persimmon and a fund managed by Aviva also closed its case with the regulator.
The CMA, meanwhile, said the probe against Britain’s largest homebuilder Barratt over possible mis-selling of leasehold homes was ongoing.
As part of its review of the leasehold sector, the CMA is also continuing to investigate two investment groups, Brigante Properties, and Abacus Land and Adriatic Land, after it wrote to the firms earlier this year setting out its concerns and requiring them to remove doubling ground rent terms from their contracts.
Ongoing: The CMA said the probe against Britain’s largest homebuilder Barratt over possible mis-selling of leasehold homes was ongoing
