Countryside Properties has agreed to free leaseholders from ground rent terms that double every 10 to 15 years after an investigation by the Competition and Markets Authority.

The developer has voluntarily committed to changing contracts so that ground rents no longer increase and instead will remain fixed at the amount charged when they first bought their home.

It is understood that 250 leaseholders with Countryside homes are directly affected by the agreement.

However, Countryside has committed to help get doubling clauses removed for around 3,400 home owners who have had their freehold sold on to other firms.

Previously leaseholders would have struggled to sell their homes or remortgage because of such clauses.

The CMA believes the original terms were potentially unfair and should therefore have been fully removed, instead of being replaced with another term that still increases the ground rent.

Countryside will also remove terms which were originally doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index (RPI).

The developer has confirmed it has stopped selling leasehold properties with doubling ground rent clauses.

It follows a move by Persimmon Homes to allow leasehold house owners the opportunity to buy their freehold at a discounted price after the CMA scrutinised its sales practices.

The CMA launched enforcement action against four housebuilders in September 2020. 

These were Countryside and Taylor Wimpey, for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes. 

Persimmon and Aviva have already reached agreements with the CMA as part of this action.

As part of its review of the leasehold sector, the CMA is continuing to investigate investment groups Brigante Properties, Abacus Land and Adriatic Land after it wrote to the firms earlier this year setting out its concerns and requiring them to remove doubling ground rent terms from their contracts. 

The CMA’s investigation into Barratt Developments and Taylor Wimpey is also ongoing.

CMA chief executive Andrea Coscelli says: “Leaseholders with Countryside can now breathe a sigh of relief knowing they will no longer be forced to pay these doubling ground rents. 

“No one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property. 

“We will continue to robustly tackle developers and investors – as we have done over the past two years – to make sure that people aren’t taken advantage of.

“Other developers, such as Taylor Wimpey, and freehold investors now have the opportunity to do the right thing by their leaseholders 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.

“This is the kind of issue that could be resolved at pace and met with fines if the CMA receives the consumer powers that the government is currently consulting on.”

Housing secretary Robert Jenrick says: “We asked the CMA to investigate the use of unfair practices in the housing market, such as doubling ground rents – and I welcome their continued success in bringing justice to homeowners.

“This settlement with Countryside will mean thousands more leaseholders are given the fair treatment they deserve and marks the third major agreement with leading UK developers and investors. 

“I strongly urge others to follow suit and end these historic practices.

“We will continue to support leaseholders who may have been mis-sold properties and our new legislation will put an end to this practice for future homeowners, by restricting ground rents in new leases to zero.”