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CMA cheers ‘real win’ for leaseholders from Aviva and Persimmon commitments

·2-min read
The CMA is led by Andrea Coscelli (CMA)
The CMA is led by Andrea Coscelli (CMA)

Leaseholders had a victory on Wednesday after the competition watchdog said it has secured “landmark” commitments from companies to tackle issues consumers have faced.

The Competition & Markets Authority, led by Andrea Coscelli, said Aviva has committed to remove certain terms from some leasehold contracts which cause ground rents to double.

It added that Persimmon will now offer leasehold house owners the opportunity to buy the freehold of their home at a discounted price.

On the ground rents, Aviva has pledged to remove the leasehold contract terms which were causing them to double every 10 to 15 years, as well as those subsequently linked to inflation.

A ground rent involves a leasehold owner of a property paying an annual fee to a freeholder.

Often housebuilders sell on freeholds to third parties. Certain ground rent clauses can make some homes unsellable as lenders will in cases not offer mortgages against them.

The investment firm’s pledge to the CMA means that Aviva’s ground rents will revert to the original amount and will not increase over time. Where ground rents have increased, people will be refunded the excess money.

Persimmon has told the CMA it will offer leaseholders the option to buy the freehold of their property at a discount, better reflecting what they expected when they originally bought their house.

Persimmon stopped selling leasehold houses in 2017 and said today’s undertakings extended its existing Right to Buy scheme.

The housebuilder’s boss Dean Finch said: “Persimmon has not historically sold leasehold houses in high volumes... However, we are committed to putting our customers first and have voluntarily agreed to extend this existing support to provide further certainty and reassurance.”

The commitments from Aviva and Persimmon are part of the CMA’s ongoing crackdown on potential breaches of consumer protection law in the leasehold housing sector.

Coscelli said: “For too long people have found themselves trapped in homes they can struggle to sell or been faced with unexpectedly high prices to buy their freehold.”

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