Persimmon, Aviva to pay up in leasehold investigation

York-based house building giant Persimmon plc and a fund managed by Aviva have agreed to measures called for by the UK’s Competition and Markets Authority (CMA) as part of an ongoing investigation into possible mis-selling of leasehold homes and high ground rents.

The CMA said on Wednesday Aviva has agreed to remove ground rent terms the CMA considers unfair and repay homeowners who saw rents doubled.

And the CMA said Persimmon has agreed to offer leasehold house owners the opportunity to buy the freehold of their property at a discounted price.

Persimmon will also make repayments to certain homeowners who have already purchased their freeholds.

The CMA said this addresses concerns raised by consumers with the CMA, and local Trading Standards, that certain homeowners were led to believe they could buy their freehold at a certain price, only to find out later that this price had increased by thousands of pounds with no warning.

It also means those individuals who have already bought their freehold will receive a refund, meaning they don’t miss out.

Persimmon has also 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.

The CMA said this addresses concerns that the “reservation period” – the period of time during which a potential buyer must take a number of steps to progress the purchase – is too short and can pressure the buyer into making a decision, and that more information is needed up-front for consumers to make purchasing decisions.

“As part of its ongoing investigation into the leasehold sector, CMA warns sector to review their practices in light of its action,” said the regulator.

CMA CEO 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.”

In a Persimmon stock exchange statement, CEO 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.

“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.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.