THOUSANDS of people living in leasehold properties are set to receive refunds for unfair ground rent charges.
Nine property companies have been ordered to remove the punitive terms from leasehold contracts, the Competition and Markets Authority said.
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Thousands of homeowners living in leasehold properties unwittingly signed up to contracts with clauses that mean their ground rent doubles every 10 years.
The companies which own the freeholds have now been ordered to remove the terms from leaseholder contracts.
Leaseholders will see their ground rents remain at the original amount from when the property was first sold, and the cost will not increase over time.
Refunds will also be given to those who have already seen their ground rents double.
It’s estimated that 20,000 homeowners will benefit from the changes.
The nine businesses included in this latest ruling are:
- BDP Freehold Limited
- Mortgage Incentive Funds Limited
- The Bridges (Darlington) Management Company Limited
- Bessant Properties Limited
- Brigante Properties Limited
- Furatto Limited and Long Term Reversions No 1 Limited
- SF Ground Rents No18 Limited, SF Ground Rents No15 Limtied, and RMB 102 Limited
- Sarum Properties Limited
- Taylor Court Limited
Four major developers – Crest Nicholson, Redrow, Miller Homes, and Vistry – have agreed to work with these companies which bought the freeholds to remove the doubling terms.
Sarah Cardell, interim chief executive of the CMA. said: “For years leaseholders have been plagued by what we believe are unfair practices. That’s why we sought to tackle the problem by launching action against some of the biggest names in the business.
“As a result of our work, over 20,000 people now have a new lease of life, freed from issues like costly doubling ground rent terms.”
Secretary of State for Levelling Up Greg Clark said: “This is good news that will see thousands of leaseholders get the refunds they are entitled to.
“We will work with the CMA to continue challenging industry on its practices, so we can ensure more leaseholders get the fair deal they deserve.”
It follows a ruling last year which saw thousands more leaseholders set for refunds when Aviva and Persimmon agreed to remove clauses from historic contracts.
What is a leasehold and could I be due a refund?
A leasehold is where a homeowner buys the right to live in a for a number of years, but doesn’t actually own the land the property sits on.
Owners of homes that are leasehold pay a ground rent to the landowner, known as the freeholder.
Ground rent is a controversial charge paid by homeowners on a leasehold property. It is essentially rent paid to the freeholder for the land the property sits on.
But, crucially, there is no limit on the amount that the freehold owner can charge in ground rent.
The charges are written into contracts but some developers have included clauses that will allow them to double the ground rent every 10 to 15 years.
It means they are left with huge bills, and often unable to sell their home because buyers don’t want to take on the costs.
The Sun previously spoke to one couple who bought a flat in 2009 with a ground rent of £250 – which was set to double every 10 years. It means that after 50 years, the annual charge would be £8,000.
New rules will effectively set ground rents to zero in England and Wales, but that’s been no help to the people already trapped in homes with these charges.
