Aviva and Persimmon to change leasehold terms after watchdog probe

Property developers Aviva and Persimmon have agreed to change their leasehold terms after a UK competition watchdog investigation into potential mis-selling and unfairness in the housing sector.

The Competition and Markets Authority said on Wednesday it had secured landmark commitments for leasehold homeowners from Aviva and Persimmon as part of its crackdown on “potential breaches” of consumer protection law.

The leasehold system, in which the developer retains the freehold and charges the homeowner a ground rent every year, has become increasingly contentious. Many homeowners have complained that they have been locked into onerous terms that make it difficult to sell the properties.

Persimmon has agreed to offer leasehold homeowners the opportunity to buy their properties from the freeholder at a discounted price. The company stopped selling leasehold houses in 2017. In an update on Wednesday, Persimmon said it would cap the purchase price of a freehold at £2,000 in an extension of an existing scheme to subsidise the cost of conversion from leasehold.

Aviva meanwhile has agreed to remove clauses from its contracts that meant ground rents doubled every ten to 15 years. The company has also agreed to repay homeowners who have been affected by the doubling in ground rents, which can make it difficult to sell or remortgage homes.

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

He warned other housebuilders could “expect to face legal action” if they did not fix issues for leaseholders.

Persimmon chief executive Dean Finch 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.”