Taylor Wimpey PLC drops rent-doubling contracts after settlement with

Taylor Wimpey PLC (LSE:TW.) agreed to strike out terms that mean ground rents double every 10 years following a settlement with the UK Competition and Markets Authority (CMA).

The contracts meant homeowners often struggled to sell or obtain a mortgage on their home, and their property rights were at risk if they fell behind with rent.

“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,” Pete Redfern, CEO of Taylor Wimpey said.

“By entering into these undertakings there is no finding that Taylor Wimpey has infringed UK consumer law.”

In a separate statement, the CMA said the commitments from Taylor Wimpey mean affected leaseholders’ ground rents will no longer increase and will remain at the amount charged when they first bought their home.

Taylor Wimpey also agreed to drop terms which had originally been ground rent-doubling clauses but were converted so the ground rent increased in line with the Retail Prices Index (RPI).

The cost of the undertakings falls within the original provision Taylor Wimpey made in 2017.

The markets watchdog launched enforcement action in September 2020 against Countryside Properties (LSE:CSP) PLC and Taylor Wimpey for possibly unfair contract terms and against Barratt Developments PLC (LSE:BDEV) and Persimmon PLC (LSE:PSN) over the possible mis-selling of leasehold homes.

The CMA secured commitments from Countryside and Persimmon earlier this year, while the investigation into Barratt is ongoing.

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.

“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.”

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.”

As part of its review of the leasehold sector, the CMA is continuing to investigate two investment groups, Brigante Properties and Abacus Land and Adriatic Land, after it wrote to the firms earlier…