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Aviva, Persimmon agree 'landmark' commitments for leaseholders - CMA
23rd Jun 2021 07:40
(Sharecast News) - The Competition and Markets Authority said on Wednesday that Aviva and Persimmon have agreed to "landmark" commitments for leaseholders.
As part of the watchdog's investigation into unfair practices in the sector, investment group Aviva has committed to remove certain terms from its leasehold contracts which cause ground rents to double and to repay those who were affecting by the issue.
Meanwhile, housebuilder Persimmon will now offer leasehold homeowners the chance to buy the freehold of their home at a discounted price. It will also make repayments to certain homeowners who have already purchased their freeholds.
In addition, Persimmon has agreed to extend the timeframe that prospective buyers are given to exchange contracts after reserving a property, and to provide people with more upfront information about the annual costs of buying a home.
CMA chief executive Andrea Coscelli 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. Now, they can breathe a sigh of relief knowing things are set to change for the better.
"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."
Russ Mould, investment director at AJ Bell, said Persimmon has taken "a big step forward" by reaching an agreement with the competition authorities over the sale of leasehold properties.
"Purchasers of these properties have in some cases been hit by escalating ground rents which have left them heavily out of pocket and struggling to sell homes on as well as claiming they weren't properly informed during the buying process.
"Investors will be relieved that Persimmon has nipped this issue in the bud by extending and solidifying some of the existing measures put in place to mitigate the issue. And while it removes a potential revenue stream for the company it also builds on the existing work it has done to address historic issues with build quality and customer care as well as excessive executive pay."
As part of the watchdog's investigation into unfair practices in the sector, investment group Aviva has committed to remove certain terms from its leasehold contracts which cause ground rents to double and to repay those who were affecting by the issue.
Meanwhile, housebuilder Persimmon will now offer leasehold homeowners the chance to buy the freehold of their home at a discounted price. It will also make repayments to certain homeowners who have already purchased their freeholds.
In addition, Persimmon has agreed to extend the timeframe that prospective buyers are given to exchange contracts after reserving a property, and to provide people with more upfront information about the annual costs of buying a home.
CMA chief executive Andrea Coscelli 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. Now, they can breathe a sigh of relief knowing things are set to change for the better.
"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."
Russ Mould, investment director at AJ Bell, said Persimmon has taken "a big step forward" by reaching an agreement with the competition authorities over the sale of leasehold properties.
"Purchasers of these properties have in some cases been hit by escalating ground rents which have left them heavily out of pocket and struggling to sell homes on as well as claiming they weren't properly informed during the buying process.
"Investors will be relieved that Persimmon has nipped this issue in the bud by extending and solidifying some of the existing measures put in place to mitigate the issue. And while it removes a potential revenue stream for the company it also builds on the existing work it has done to address historic issues with build quality and customer care as well as excessive executive pay."