Thousands of leaseholders who paid a ground rent that doubled every 10 years will receive refunds, after action from the Competition and Markets Authority (CMA).

In addition, more companies have agreed to remove these costly terms from leasehold contracts.

The move will benefit over 5,000 households throughout the UK, with many who paid a doubled rent receiving a refund.

The CMA added that so far over 20,000 leaseholders have been helped by its investigation into unfair terms on leasehold properties, which started in 2019.

What happened?

Some buyers found that the terms of their contract caused their ground rent to double in price every 10 years. This led to them being trapped in homes they couldn’t sell or mortgage.

The firms involved will now remove contract terms which were originally doubling clauses, as well as those that changed the terms so the ground rent increased in line with the Retail Price Index (RPI).

The CMA said that the original doubling clauses were unfair and should therefore have been fully removed – not replaced with another term that still increases the rent.

All affected leaseholders will now see their ground rents remain at the original amount when the property was first sold – and this will not increase over time.

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.

“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.”