Further changes are afoot in the residential leasehold sector following an investigation by the Competition and Markets Authority (CMA). The CMA expressed concern that residential leaseholders were facing expensive and unexpected increases in the ground rent payable under their lease and also in the cost of buying the freehold of their building.
Following the CMA’s investigations and conclusions, house builder Persimmon has announced that it will allow its leaseholders to buy the freehold of their property at a discount. Further, insurance company Aviva, which buys leaseholds from house builders has indicated that it will repay to leaseholders any increase in their ground rent which has already been paid.
CMA Chief Executive, Andrea Coscelli, has said that she expects other housing developers and investors to take similar action. She went on to say that if other housing developers and investors do not follow the lead of Persimmon and Aviva, they can expect to face legal action.
The above follows the introduction to Parliament on 12 May 2021 of the Leasehold Reform (Ground Rent) Bill and the government’s announcement earlier in the year to reform the current legislation to make it easier and less costly for residential leaseholders to extend the term of their lease and/or to acquire the freehold. If and when the Bill receives Royal assent, it will implement the Government’s commitment to ensure that ground rents in new long residential leases are capped at a peppercorn. The investigation by the CMA and the lead taken by Persimmon and Aviva will hopefully help existing long residential leasehold owners who may not benefit from the Leasehold Reform (Ground Rent) Bill once introduced into law to secure a lower ground rent. In the meantime we await further announcements from the government regarding the other areas of leasehold law which it is committed to reform.