Leases are granted over properties and exist for a finite period of time. Once this period comes to an end, the property reverts to the freehold owner. When an individual purchases a lease, they do so subject to certain conditions, such as that they will pay ground rent periodically and that they will acquire the freeholder's consent if they wish to sell the lease.
An issue which has arisen in recent years is that developers have begun including provisions thereby enabling them to double ground rent periodically, which makes leases both difficult to sell and mortgage. In May of this year the Leasehold Reform (Ground Rent) Bill was introduced to Parliament and further to this, in September the Competition and Markets Authority (CMA) launched enforcement action against developers including Taylor Wimpey, Countryside, Barratt Developments and Persimmon Homes for "possible unfair contract terms" relating to ground rent.
Taylor Wimpey have now voluntarily committed to remove any such unfair terms from their existing leasehold contracts and to exclude these terms from new contracts. The effect of this is that ground rent will now be set at the rate it was when the property was sold and will not rise over time. Countryside Properties has voluntarily removed the terms from their contracts and Aviva who purchased freeholds from developers also agreed to remove ground rent terms that were considered unfair. We wait to see if other developers will follow Taylor Wimpey without further intervention from the CMA and the outcome of the ongoing investigation in Barratt Development.
If you are a leaseholder requiring advice on your obligations or you are looking to purchase a leasehold property, contact us today to find out how we can help. For more information or to arrange an appointment, contact us on 01603 693500 or email us using our 'Make an enquiry' form on our website. Face-to-face meetings are available by appointment at our Norwich, North Walsham, and Sheringham offices.
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*This article is provided for general information purposes only and does not constitute legal advice or other professional advice.
