Britain’s competition watchdog has declared victory for thousands caught in the UK lease scandal.
The Autorité de la concurrence et des marchés has obtained formal commitments from the investment group Aviva and home builder Feet this will help clients who have bought homes on lease, rather than owning full ownership.
Aviva is one of the many investment firms that have bought freehold properties from home builders.
Some leases on new developments have stated that land rents will double every 10 years.
This has left tenants trapped in spiraling ground leases, rendering some homes mortgage-free and leaving landlords unable to move and faced with high bills – prompting the government to propose reforms:
Aviva has agreed to remove the controversial and unfair land rent terms that have seen land rents paid by tenants double every 10 or 15 years, and to reimburse those who have lost because of these rising land rents.
The CMA explains:
- Aviva will remove from the leases certain clauses which doubled the land rents owed by tenants. It will also remove terms that were originally doubling clauses and have been converted to ground rent terms based on the RPI. Doubling clauses that double land rents every 10 to 15 years mean that people can often find it difficult to sell or mortgage their homes. They can also affect tenants’ property rights. When Aviva is the current upfront owner, land rents for those tenants will revert to the original amount – that is, when the property was first sold – and this will not increase over time.
- Aviva has also agreed to reimburse landlords affected by these land rent doubling clauses. This means that when land rents have gone up, people will be reimbursed for the excess money they paid during that time.
Persimmon Homes has agreed to allow leasehold homeowners to purchase full ownership of their property at a reduced price capped at £ 2,000.
This responds to concerns expressed by consumers to the CMA and local business standards that they were tricked into believing they could buy their freehold property at a certain price, only to later find that price had gone up by thousands. of books without warning.
Persimmon, which stopped leasing homes in 2017, has pledged to:
- An extension of its existing right to purchase program to cap the purchase price of a freehold property at £ 2,000. This extended regime will apply to any real estate lease sold as of January 1, 2000 and runs until December 31, 2026;
- Customers who have already acquired their freehold properties from Persimmon under the existing right to purchase program, and who still own the freehold property, may request reimbursement of the difference between the price paid and £ 2,000;
Persimmon is also extending its reservation period for home buyers from 35 days to 42 days.
Last year, the AMC launched enforcement action involving Persimmon, Barratt Developments, Countryside Properties and Taylor Wimpey, to determine whether they had violated consumer protection law in relation to leasehold homes. He is also studying other investment companies that have bought freehold properties.
Today, he urges other home builders and investors to follow Aviva and Persimmon’s lead.
Andrea Coscellis, general manager of the RMR, mentionned:
This is a real win for thousands of tenants – for too long people have found themselves trapped in homes they may have a hard time selling or faced surprisingly high prices to buy their full property. Now they can breathe a sigh of relief knowing that things will change for the better.
It’s good that Aviva and Persimmon responded positively to this survey, helping to resolve these issues for tenants. But our work is not finished. We now expect other real estate developers and investors to follow suit with Aviva and Persimmon. Otherwise, they can expect legal action.
Also coming today
Flash PMI surveys companies from the UK, Europe and the US will show whether the economic recovery holds up this month.
UK travel industryis organizing a day of action to put pressure on the government to reopen the sector and provide adequate financial support to businesses.
Events are planned outside the Parliaments of London and Edinburgh, as well as in cities and airports across the UK.
Industry body Abta estimates that as many as 195,000 jobs have been lost or are threatened in the UK travel industry, while a membership survey found more than half did not have enough money to survive more than three months under current conditions.
Pharmaceutical group GlaxoSmithKline is hosting a Capital Markets Day, where Managing Director Emma Walmsley will brief investors on her plans to restructure the company into a pharmaceutical and vaccine company, dubbed ‘New GSK’, and a large healthcare company public.
It’s a pivotal day for Walmsley, as New York-based Elliott Management took a multibillion pound stake in GSK in April to push for change, with some investors concerned about the slow progress of the drug pipeline.
My colleague Julia Kollewe Explain :
The head of Britain’s second-largest drugmaker will present a 10-year perspective to shareholders and analysts, under pressure from an aggressive US hedge fund to demonstrate that she is the right fit to lead the company beyond its dissolution next summer.
- 9 a.m. BST: flash index of purchasing managers in the euro zone for services and industry, June
- 9:30 am BST: UK flash PMI
- Noon: weekly mortgage applications in the United States
- 3 p.m .: New home sales in the United States
- 15h BST: US flash PMI