The Competition and Markets Authority (CMA) has secured formal commitments from leading companies as part of its ongoing work to resolve issues in the rental sector.
Aviva has committed to removing conditions from its leases that double land rents, and Persimmon will now offer leasehold homeowners the option to purchase full ownership of their home at a reduced price.
On top of that, Aviva has agreed to reimburse landlords who have been affected by these doubling ground rent clauses.
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Persimmon also agreed to extend the time frame for potential buyers to exchange contracts after reserving a property, and to provide people with more information up front about the annual costs of buying a home.
The move comes after the CMA launched enforcement action against four real estate developers in September 2020.
As part of this action, the CMA also investigated several investment companies that bought a large number of property rights from two of these developers and continued to use these same land rent conditions.
The CMA has also written to investment groups Brigante Properties, Abacus Land and Adriatic Land, expressing their concerns and asking them to remove the land rent doubling conditions from their contracts.
They now have the opportunity to address CMA’s detailed concerns and avoid legal action by signing pledges to remove these conditions.
Andrea Coscelli, CEO of CMA, said: “This is a real victory for thousands of tenants – for too long people have found themselves trapped in homes they may have difficulty selling or have been. faced with surprisingly high prices to buy their freehold.
“Now they can breathe a sigh of relief knowing that things are going to change for the better.
“It’s good that Aviva and Persimmon have 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 the lead of Aviva and Persimmon. Otherwise, they can expect legal action. “
Robert Jenrick, Housing Secretary, added: “The government has asked the CMA to conduct this investigation – and I applaud their efforts to bring justice to landlords affected by unfair practices, such as doubling land rents, which failed have no place in our housing market.
“This settlement with Aviva and Persimmon is an extremely important step and demonstrates our commitment to supporting existing tenants who may have been mis-sold.
“We have also introduced new legislation that will protect future landlords by limiting land rents to zero in new leases and I strongly urge other developers to follow suit by changing their historical practices.”