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In September 2020, the Competitions and Markets Authority (CMA) launched enforcement action against four major housing developers, including Countryside Properties and Taylor Wimpey, for possible unfair contract terms. In March 2021, the CMA wrote to those two developers requiring removal of ground rent clauses.
Taylor Wimpey’s ground rent pledge
Further to this, Taylor Wimpey has pledged to strike out doubling leasehold ground rents. This comes shortly after a similar commitment from the developer, Countryside. The CMA has announced that Taylor Wimpey is giving voluntary formal commitments to remove terms from leasehold contracts that cause ground rents to double in price.
Interestingly, terms that had originally been ground rent doubling clauses but were converted to Retail Price Index-linked clauses will also be removed. This demonstrates the concern regarding RPI-linked clauses too and indicates that they do not resolve the issue (our blog regarding RPI-linked ground rent clauses can be found here).
The CMA warned that it will take legal action against other developers that refuse to remove similar clauses. The CMA Chief, Andrea Coscelli, comments about doubling ground rents:
“These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage.”
Ground rent claims against conveyancing solicitors
Ground rents are now more than ever a well-known issue that is causing problems for leaseholders far and wide. Unfortunately, a number of these leaseholders were not correctly advised by their conveyancing solicitors at the time of the risks and implications associated with these problematic clauses. Ground rent provisions have meant that some leaseholders are unable to obtain favourable mortgages as lenders are deterred from offering whilst such a clause is in place. Conveyancing solicitors were criticised during the last parliamentary debate for failing to properly advise current leaseholders who feel “trapped in their own homes”.
Comment
At Nelsons, we are dealing with a number of claims against conveyancing solicitors who did not properly advise leaseholders in respect of their ground rent liabilities. The recent action from Taylor Wimpey supports the position that the clauses were unreasonable and unwarranted, and, therefore, that solicitors should have advised at the time.
Whilst the announcement from Taylor Wimpey is welcome, it does not address the broader issue of the ground rent systems. The Leasehold (Ground Rent) Reform Bill will ensure that new leases granted will not have the problem of rising ground rents. However, there is no indication that it will tackle the issue of rising ground rents on existing leasehold properties and leaseholders are forced to seek their own action for redress.
How we can help
If the above situation seems familiar to you and you were not properly advised by your conveyancing solicitors and are stuck with an onerous ground rent provision, feel free to get in touch with a member of our expert Dispute Resolution team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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