The firms all bought freeholds from leading housing developer Taylor Wimpey. The freeholds had contract terms that caused rents to double in price every 10 years.
Some of the companies had changed these terms so that rents rise in line with inflation. These terms can mean that owners are trapped in their homes and cannot sell or mortgage them.
After intervention from the Competition and Markets Authority (CMA), these firms have agreed to remove the clauses and refund homeowners who paid extra rent.
A further four national developers, Crest Nicolson, Redrow, Miller Homes and Vistry, have also agreed to work with companies that purchased their freeholds to remove doubling terms.
The move will affect more than 5,000 households, according to the CMA. More than 20,000 homeowners have benefitted from the watchdog’s investigation into the issue.
Sarah Cardell, interim chief executive of the CMA, said: “For years leaseholders have been plagued by what we believe are unfair practices. That’s why we sought to tackle the problem by launching action against some of the biggest names in the business.
“As a result of our work, over 20,000 people now have a new lease of life, freed from issues like costly doubling ground rent terms.”
Secretary of state for levelling up Greg Clark added: “This is good news that will see thousands of leaseholders get the refunds they are entitled to.
“Levelling up home ownership and creating a fairer, more transparent leasehold system is a top priority for this government, and these agreements are an example of this in action.
“We will work with the CMA to continue challenging industry on its practices, so we can ensure more leaseholders get the fair deal they deserve.”
Article originally posted by Mortgage Solutions