Fifteen housing associations and investment firms have agreed to remove costly ground rent increases after action by the Competition and Markets Authority.

This action protects 3,400 leaseholders, whose ground rent will now remain at amount charged when their home was first sold, rather than doubling every 10 or 15 years.

All fifteen businesses bought these freeholds to these properties from the housing developer Countryside. The CMA said it would continue to put other housing developers “under the microscope” as it continues its investigation into this issue.

These fifteen business have agreed to remove terms that caused ground rent to double in price after a fixed period of time. These increases have meant leaseholders can struggle to sell or obtain a mortgage on these properties. Their property rights can also be at risk if they fall behind on this ground rent. 

This latest action by the CMA comes after it secured undertaking from Countryside in September last year to strike out the terms. At the same time it also launched enforcement action against four housing developers: Countryside and Taylor Wimpey for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes. 

The CMA said that after securing undertaking from Countryside to remove doubling ground rent terms from its contracts, it went on to investigate the businesses that bought these freeholds and continued to use the same terms at the expense of leaseholders. 

As part of this ongoing review the CMA is continuing to investigate two investment groups: Brigante Properties and Abacus Land and Adriatic Land. Both have agreed to remove thee terms from leases bought from Countryside, but the CMA is seeking similar action on leases bought from Taylor Wimpey. 

Secretary of state for levelling up, Michael Gove said the government had asked the CMA to investigate unjust practices in the leasehold system. 

“I welcome their ongoing success in eradicating this unacceptable treatment of leaseholders from the housing market and freeing thousands of such inflated costs. Others must now follow suit, as our work to help all leaseholders continues.”

He said the CMA’s action help set a path to a more equal future for homeownership.