Consumer rights

Thousands more tenants freed from rising land rents

  • Fifteen companies to scrap costly ground rent terms
  • Land rents for more than 3,400 tenants will now remain at the amount charged when their home was first sold
  • CMA chief executive says more property developers will be put ‘under the microscope’ as investigation continues

Fifteen companies that had bought freehold properties from property developer Countryside have now made formal undertakings – called undertakings – to the Competition and Markets Authority (CMA) to remove conditions that double the price of land rents. These terms, which come into effect every 10 or 15 years, mean people often struggle to sell or get a mortgage on their leasehold home. Their property rights can also be threatened if they fall behind on their ground rent. The move comes after the CMA secured commitments from Countryside in September 2021 to remove terms that doubled ground rent every 10 to 15 years.

The businesses, which include investment firms and housing associations, will also remove terms that were originally ground rent doubling clauses, but have been converted so that ground rent increases in line with the retail price index (RPI). The CMA considers that the initial doubling clauses were unfair clauses and should therefore have been deleted entirely, and not replaced by another clause which increases ground rent.

The move comes after the AMC launched legal action against 4 property developers in September 2020. These were Countryside and Taylor Wimpey for using possibly abusive contract terms, and Barratt Developments and Persimmon Homes for the possible sale abuse of rental housing.

After securing commitments from Countryside to remove double ground rent terms from its contracts, the CMA turned to companies that purchased Countryside freeholds and continued to use the same ground rent terms at the expense of tenants. The CMA has written to these companies expressing its concerns and asking them to remove these clauses from their contracts.

Thanks to the intervention of the CMA, thousands of tenants will now see their land rents remain at the original amount – i.e. when the property was first sold – and they will not increase over time. .

Andrea Coscelli, Chief Executive Officer of CMA, said:

“Thousands of additional tenants can now rest easy knowing they won’t be forced to pay doubly expensive ground rents. We believe these conditions are unfair and unwarranted, and can lock people into homes they cannot sell or mortgage – a major cause of anxiety and stress for so many people.

“We applaud these companies’ commitment to doing what’s right for their tenants by removing these terms, and we will oblige them to do so.

“While this is a huge step forward, our work here is not done. We will continue to work hard to free tenants from these problematic conditions and will now put other property developers under the microscope.

Leveling Secretary Michael Gove said:

“We are restoring fairness to the tenancy system and that is why we have asked the AMC to investigate unfair practices, such as the doubling of ground rent.

“I salute their continued success in eradicating this unacceptable treatment of tenants from the housing market and freeing thousands from these inflated costs. Others must now follow suit, as our work to help all tenants continues.

“Homebuyers starting a new lease from this summer will now pay nothing in ground rent fees – paving the way for a more equal future for homeownership.”

As part of its ongoing review, the CMA continues to investigate 2 investment groups: Brigante Properties, and Abacus Land and Adriatic Land. While the two companies have agreed to remove the ground rent doubling terms from the leases they purchased from Countryside, the CMA is asking the same with respect to the leases they purchased from Taylor Wimpey. The CMA argues that these terms should be deleted. The CMA’s investigation into possible mis-selling by Barratt Developments is also continuing. Further updates will be made in due course.

For more information on AMC’s ongoing work in the sector and for future updates, visit the lease case page.

Notes to Editors

  1. These undertakings were provided to the CMA voluntarily and without any admission of wrongdoing or liability. It should not be assumed that any of the 15 companies broke the law – only a court can decide if a breach has occurred.
  2. The 15 companies that have provided commitments are:

    • Adriatic Land 3 Limited (part of the Abacus Land and Adriatic Land investment group);
    • Brigante Properties Limited;
    • Chris Allnutt and Company Management Limited;
    • Claycourt Limited;
    • Penult 101 Limited;
    • RMB 102 Limited;
    • SF Ground Rents No 15 Limited;
    • Great Places Housing Association;
    • London and Quadrant Housing Trust;
    • Mann Island Properties Limited;
    • Notting Hill Genesis;
    • Poplar Housing and Regeneration Community Association Limited;
    • RG Reversions 2014 Limited;
    • Tapestart limited;
    • Weathercourt Limited.
  3. AMC is in talks with the 2 remaining owners who have purchased properties from Countryside but have not yet signed a commitment: DATS (Holdings) Limited and Wallace Estates. DATS has agreed in principle to provide commitments subject to definitive agreements with Countryside.
  4. For people who own or are looking to buy a leasehold property, the AMC has produced written and video advice, which offers advice on a number of issues, including what people can do when faced with costs and charges that they deem unjustified.
  5. In September 2021, Countryside Properties signed covenants committing it to remove conditions that mean land rents double every 10 to 15 years.
  6. In December 2021, Taylor Wimpey pledged to remove ground rent doubling terms from their contracts and the CMA is engaging with companies that have purchased freehold properties from the developer to ensure they also waive the terms .
  7. In June 2021, Aviva pledged to remove the doubling of land rental terms and Persimmon Homes pledged to offer leasehold homeowners the option to purchase full ownership of their property at a reduced price.
  8. The housing developer currently remaining under investigation by the AMC is Barratt Developments due to concerns about its sales practices with respect to leasehold properties. It should not be assumed that Barratt broke the law. The AMC has not yet named which other property developers should be reviewed – it will once a formal investigation into a company begins.
  9. Investors under investigation who freehold leaseholds – purchased from Taylor Wimpey – with ground rents doubling under 20 years are Brigante Properties, Abacus Land and Adriatic Land. It should not be assumed that any of these companies broke the law.
  10. The main provisions of consumer protection law relevant to the CMA’s concerns about ground rent terms are unfair terms in the Consumer Contracts Regulations 1999 (UTCCR), for contracts entered into before 1 October 2015, and Part 2 of the Consumer Rights Act 2015 (CRA), for contracts made on or after 1 October 2015. The UTCCR and Part 2 of the CRA aim to protect consumers against unfair contract terms and require contractual terms to be fair and transparent.
  11. The main provisions of consumer protection law relevant to the CMA’s concerns about unfair selling are the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs aim to protect consumers against unfair commercial practices such as the misleading provision or omission of information as part of sales processes.
  12. As the enforcement authority under Part 8 of the Enterprise Act 2002, the CMA cannot currently impose administrative fines for breaches of this consumer protection legislation, but it can enforce the legislation before the courts and, if necessary, obtain additional measures to improve consumer choice, better comply with the law or obtain redress for consumers. The government is consulting on proposals to give the CMA new powers, including the power to impose fines for breaches of consumer protection law.
  13. The CMA’s investigation into potential mis-sales of leasehold properties has been supported by several local trading standards offices which have been the focal point for some consumers to raise concerns.
  14. All journalists’ inquiries should be directed to the CMA Press Office by email at [email protected] or by telephone on 020 3738 6460.
  15. All inquiries from the general public should be directed to the CMA’s General Inquiries team at [email protected] or 020 3738 6000.