The unfair leasehold scandal has claimed its first two corporate scalps after both house builder Persimmon and freeholder Aviva have today promised to remove doubling rents clauses from existing house leaseholds, agreed to compensate leaseholders caught up in the scandal and help them buy their freeholds at a discount.
Persimmon will also now give home buyers more time to purchase a property after reservation to stop pressure sales during which many buyers don’t have the time to understand the annual costs of owning their home.
The announcement follows a Competition and Markets Authority (CMA) investigation launched in June 2019 to look into the scandal.
While Persimmon and Aviva are the first to commit to change, other companies are expected to follow suit including Taylor Wimpey, Countrywide Properties, Brigante Properties, and Abacus Land and Adriatic Land.
Aviva has promised to remove doubling ground rent and retail price index-based ground rent increase clauses from existing leaseholds and revert them to their starting ground rents.
Aviva will also reimburse property owners who have been affected by doubling ground rent clauses.
Persimmon is to also offer leasehold house owners the option to buy the freehold of their property at a discount, and reimburse those who have already bought their freeholders without the discount.
Dr Andrea Coscelli (pictured), Chief Executive of the CMA, says: “We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action.”
Housing Secretary Robert Jenrick says: “The Government asked the CMA to conduct this investigation – and I welcome their efforts to bring justice to homeowners affected by unfair practices, such as doubling ground rents, which have no place in our housing market.”
Mark Hayward, Policy Director at Propertymark (pictured) says: “This is another positive step in remedying the leasehold scandal that has impacted far too many people for so long. Leasehold house owners have lived with untold anxiety, knowing that their homes were essentially unsellable.
“The CMA’s action will help those whose freeholds are with Aviva and Persimmon; other house developers and investors must now commit to make similar undertakings to ensure all leasehold house owners can move forward with their lives.
“Our Leasehold: A Life Sentence research found that 57 per cent of leaseholders had no idea what buying a leasehold home meant until after they had gone through with the purchase and 94 per cent regret doing so.”