Better deal for leaseholder home owners following regulator probe

Housebuilder Persimmon has made a number of concessions to leasehold homeowners to end its exposure to a Competition and Markets Authority (CMA) investigation.

The CMA began enforcement action last September against four volume housebuilders – Persimmon, Barratt Developments, Countryside Properties and Taylor Wimpey – alongside investment groups including Aviva that had bought leasehold contracts.

The regulator said it had uncovered “troubling evidence” of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling.

It was concerned that leasehold homeowners may have been unfairly treated and that buyers may have been misled by developers.

York-headquartered Persimmon, which is one of the largest housebuilders in the UK, has agreed “voluntary informal undertakings” to address the CMA’s concerns.

It has agreed to cap the purchase price of a freehold at £2,000, to reimburse homeowners who have paid more than £2,000 to acquire their freehold, and extend its reservation period for home buyers from 35 days to 42 days.

It notes the informal voluntary undertakings agreed today largely extend existing schemes it has in place and have been made without any admission of wrongdoing or liability.

Persimmon has today said it stopped selling leasehold houses in 2017, other than in exceptional cases, and also introduced a Right to Buy scheme enabling customers with leasehold houses to buy their freehold at a price below market value.

Dean Finch

Dean Finch, group chief executive, said: “Persimmon has not historically sold leasehold houses in high volumes and introduced a Right to Buy scheme for leaseholders in 2017.

“However, we are committed to putting our customers first and have voluntarily agreed to extend this existing support to provide further certainty and reassurance.

“Building on our existing Right to Buy scheme, this agreement provides a fair deal for all leaseholders of Persimmon built houses, extending the opportunity to purchase their freehold at a price well below market value.

“Today’s agreement further demonstrates Persimmon’s determination to operate with integrity as we continue to build a business with a long-term, responsible and sustainable future.”

The CMA has also secured formal commitments from Aviva, which is to remove certain terms from its leasehold contracts which cause ground rents to double.

Andrea Coscelli, chief executive of the CMA, said: “This is a real win for thousands of leaseholders – 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.

“It’s good that Aviva and Persimmon have responded positively to this investigation, enabling these issues to be fixed for leaseholders. But our work isn’t done.

“We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action.”

Housing Secretary Robert Jenrick added: “This settlement with Aviva and Persimmon is a hugely important step and demonstrates our commitment to support existing leaseholders who may have been mis-sold properties.

“We have also introduced new legislation that will protect future homeowners by restricting ground rents in new leases to zero and I would strongly urge other developers to follow suit in amending their historic practices.”