Taylor Wimpey and Countryside told to remove ‘unacceptable’ leasehold terms

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The competition watchdog has ordered the housebuilders Taylor Wimpey and Countryside Properties to remove terms in contracts that have made it impossible for some homeowners to get a mortgage or sell their properties.

The Competition and Markets Authority has told the two firms to remove certain contract terms that mean leaseholders have to pay ground rents that double every 10 to 15 years.

“These ground rent terms can make it impossible for people to sell or get a mortgage on their homes, meaning they find themselves trapped,” said Andrea Coscelli, the chief executive of the CMA. “This is unacceptable. Countryside and Taylor Wimpey must entirely remove all these terms from existing contracts to make sure they are on the right side of the law. If these developers do not address our concerns, we will take further action, including through the courts, if necessary.”

The CMA has written to the businesses stating that their practices break consumer protection law, giving them the opportunity to sign formal commitments, known as undertakings, to remove the terms from contracts.

Robert Jenrick, the housing secretary, said that the CMA’s action would bring “justice to homeowners”.

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“Unfair practices, such as crippling ground rents, have no place in our housing market,” said Jenrick. “This behaviour must end and I look forward to appropriate redress being forthcoming for leaseholders.”

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In a statement to investors Taylor Wimpey acknowledged that it has received the letter from the CMA and said it would cooperate.

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“We have now received a letter from the CMA setting out its concerns and confirming that it intends to move to the next stage of formal consultation,” the company said. “We will continue to cooperate with the CMA and work with them to find a satisfactory resolution, within the required timescale.”

The CMA’s action follows the launch of an investigation in September into the UK’s four biggest housebuilders, including Barratt and Persimmon, after uncovering evidence that buyers of leasehold properties were misled and charged excessive fees.