CMA obtains historic commitments for tenants

  • Aviva will remove land lease terms that AMC deems unfair and reimburse landlords who have seen their rents doubled
  • Persimmon Homes will offer leasehold homeowners the option to purchase full ownership of their property at a reduced price
  • As part of its ongoing rental sector investigation, AMC is warning the sector to review its practices in light of its action

Aviva has committed to removing conditions from its leases that double land rents, and Persimmon will now offer leasehold homeowners the option to purchase full ownership of their home at a reduced price.

This decision comes after the Competition and Markets Authority (CMA) launched coercive action against 4 real estate developers in September 2020. As part of this action, the CMA also investigated several investment companies that have purchased a large number of freehold properties from 2 of these developers. and continued to use those same land rent conditions.

The commitments signed by Aviva and Persimmon – officially known as “commitments” – mean that they have now agreed to the following:

  • Aviva will remove from the leases certain clauses which doubled the land rents owed by tenants. It will also remove terms that were originally doubling clauses and were converted to land rent terms based on the RPI. Doubling clauses that double land rents every 10 to 15 years mean that people can often find it difficult to sell or mortgage their homes. They can also affect tenants’ property rights. When Aviva is the current upfront owner, land rents for those tenants will revert to the original amount – that is, when the property was first sold – and this will not increase over time.
  • Aviva has also agreed to reimburse landlords affected by these land rent doubling clauses. This means that when land rents have gone up, people will be reimbursed for the excess money they paid during that time.
  • Persimmon will offer leasehold homeowners the opportunity to purchase full ownership of their property at a reduced price, better reflecting what they expected when they originally purchased their home. It will also issue refunds to some homeowners who have already purchased their freehold. This responds to concerns expressed by consumers to the CMA and local business standards that they were tricked into believing they could buy their freehold property at a certain price, only to later find that price had gone up by thousands. of books without warning. It also means that people who have already purchased their freehold will receive a refund meaning they won’t miss a thing.
  • Persimmon has also agreed to extend the time frame for potential buyers to exchange contracts after reserving a property, and to provide people with more information up front about the annual costs of buying a home. This addresses concerns that the ‘reservation period’ – that is, the period during which a potential buyer must take a number of steps to move the purchase forward – is too short and may push the buyer away. to make a decision, and that more information is needed upfront for consumers to make their purchasing decisions.

Andrea Coscelli, Director General of the AMC, said:

This is a real victory for thousands of tenants – for too long people have found themselves trapped in homes they may have a hard time selling or faced with surprisingly high prices to buy their full property. Now they can breathe a sigh of relief knowing that things will change for the better.

It’s good that Aviva and Persimmon responded positively to this survey, helping to resolve these issues for tenants. But our work is not finished. We now expect other real estate developers and investors to follow suit with Aviva and Persimmon. Otherwise, they can expect legal action.

Housing Secretary Robert Jenrick said:

The government has asked the CMA to conduct this investigation – and I applaud their efforts to bring justice to landlords affected by unfair practices, such as doubling land rents, which have no place in our housing market.

This settlement with Aviva and Persimmon is an extremely important step and demonstrates our commitment to supporting existing tenants who may have been mis-sold.

We have also introduced new legislation that will protect future landlords by limiting land rents to zero in new leases and I strongly urge other developers to follow suit by changing their historical practices.

The CMA has also written to investment groups Brigante Properties, Abacus Land and Adriatic Land, expressing their concerns and asking them to remove the land rent doubling conditions from their contracts. They now have the opportunity to address CMA’s detailed concerns and avoid legal action by signing pledges to remove these conditions.

For more information on the CMA’s review of the lease industry and for future updates, please visit the Lease Case page.

Notes to Editors:

  1. These undertakings were provided to CMA voluntarily and without any admission of wrongdoing or liability. It should not be assumed that companies have broken the law – only a court can decide whether there has been a violation.
  2. For people who own or are looking to buy leasehold property, AMC has produced written and video tips, which offer advice on a number of issues, including what people may face with fees and charges. which they consider unjustified.
  3. The 4 real estate developers targeted by the AMC’s investigation are Countryside Properties and Taylor Wimpey, for using potentially unfair contract terms, and Barratt Developments and Persimmon Homes for a possible abuse of leasehold properties.
  4. The investment groups studied are Aviva, Abacus Land and Adriatic Land (in particular Abacus Land 1 (Holdco) Limited, Abacus Land 4 Limited, Adriatic Land 1 (GR3) Limited) and Brigante Properties. These companies bought lease contracts from 2 of the developers under investigation: Countryside and / or Taylor Wimpey.
  5. The AMC investigation into Countryside, Taylor Wimpey and Barratt Developments – and named investment groups other than Aviva – is ongoing and it should not be assumed that they have broken the law.
  6. The main provisions of consumer protection law regarding the CMA’s concerns regarding land tenancy conditions are the Abusive Terms in Consumer Contracts Regulation 1999 (UTCCR), for contracts entered into before October 1, 2015 , and Part 2 of the Consumer Rights Act 2015 (CRA). , for contracts entered into as of October 1, 2015. The UTCCR and Part 2 of the CRA aim to protect consumers against unfair contract terms and require that contract terms be fair and transparent.
  7. The main provisions of consumer protection law relating to the CMA’s concerns about abusive sales are the Consumer Protection Against Unfair Commercial Practices (CPP) Regulations 2008. CPRs aim to protect consumers from unfair business practices such as providing or omitting misleading information as part of the sales process.
  8. As an authority under Part 8 of the Enterprise Act 2002, the CMA cannot impose administrative fines for violations of this consumer protection law, but it can enforce the law through from the courts and, where appropriate, obtain additional measures to improve consumer choice, better drive compliance with the law, or obtain redress for consumers.
  9. AMC’s investigation of potential leasehold sale abuse was supported by several local Trading Standards offices who have been the point of contact for some consumers to raise concerns.
  10. Persimmon has a current program allowing leasehold homeowners to purchase their freehold property. The commitments it has signed with the CMA allow tenants to buy back their full ownership at a price lower than the price of this regime. People who purchased under the existing plan may be entitled to a refund.

Source link

Leave A Reply

Your email address will not be published.