Thousands to be refunded after ground rent ‘unfairly’ doubled – how to get your money back
Some 5,000 households in the UK who paid a doubled ground rent on their homes will get a refund after an investigation by the competition watchdog revealed “unfair” leasehold practices.
The Competition and Markets Authority (CMA) previously investigated the ground rent clauses of housing developer Taylor Wimpey and, now, after a further probe, nine companies that had bought freeholds from Taylor Wimpey have said they will halt the practice of doubling ground rents and refund any leaseholders who've already paid out under these terms.
Households who were caught in these contracts - that saw their ground rents double every 10 years and meant many became trapped in properties they could not sell or remortgage as a result - may now be due a refund.
Separately, a further four national property developers – Crest Nicholson, Miller Homes, Redrow, and Vistry – have also agreed to work with the companies that purchased their freeholds to remove doubling terms.
Ground rent is a fixed annual fee that many leasehold homeowners have to pay to their property's freeholder, essentially for the use of the land on which the property stands. Traditionally this was only a nominal amount, but the past 20 years has seen a rise in leasehold properties with ground rents of £100, £200 and £250 a year (sometimes more).
The leasehold sector has also been beset with complaints about unfair lease terms after developers and freeholders started creating leases that caused ground rents to double every 10 or 20 years – though some major developers have agreed to amend leases on homes following CMA involvement.
Nine firms will provide ground rent refunds, covering 5,000 households
- BDP Freehold
- Bessant Properties
- Brigante Properties
- Furatto and Long Term Reversions No 1
- Mortgage Incentive Funds
- Sarum Properties
- SF Ground Rents No 18, SF Ground Rents No 15 and RMB 102
- Taylor Court
- The Bridges (Darlington) Management Company
You should be contacted within 30 days with a refund offer
If you still live in an affected property, you should be contacted within 30 days with a refund offer.
Some companies have already begun contacting leaseholders, but we've asked exactly how you can be expected to be contacted and we will update this piece once we know more. In the meantime, make sure your contact details with your leaseholder are up to date.
If you've left the property and think you're entitled to a refund, or you'd simply like more information on your situation, contact your former freeholder.
Once you've accepted your refund offer, the money should be paid within 30 days via bank transfer. The amount refunded will differ from company to company depending on its terms.
You can extend your lease to try to avoid rising ground rents
One way to try to get around increasing ground rent clauses is to take out what is known as a ‘statutory’ lease extension - which you can do if you have owned your property for at least two years. This extends the lease but also reduces the ground rent down to zero, which is sometimes referred to as a 'peppercorn' lease.
To do this though, you will have to pay the freeholder a premium, and you'll also have to pay for the legal costs of extending the lease. How much this premium is will depend on several factors, including the price of the property, so ensure you know the costs involved first.
Around 4.5 million people in England currently own their home on a leasehold basis - typically flat owners and some new-build property owners. See our What is a leasehold? guide for more info on how they work.
What does the CMA say?
Sarah Cardell, interim chief executive of the CMA, said: "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."
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