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Britain's Persimmon, Aviva to amend home leases after inquiry

Stock MarketsJun 23, 2021 05:00AM ET
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© Reuters. FILE PHOTO: Builders construct modular Space4 homes on a Persimmon development in Coventry, February 22, 2017. Picture taken February 22, 2017. To match Insight BRITAIN-EU/CONSTRUCTION REUTERS/Darren Staples/File Photo

By Pushkala Aripaka

(Reuters) -Persimmon Homes and a fund managed by Aviva (LON:AV) have agreed to measures called for by Britain's competition regulator as part of an ongoing investigation into possible mis-selling of leasehold homes and high ground rents.

Insurer Aviva will remove "unfair" ground rent terms and repay owners whose rents were doubled, the Competition and Markets Authority (CMA) said on Wednesday.

Persimmon (LON:PSN) will offer leasehold owners an option to get complete ownership of their property at lower rates.

The regulator launched the investigation in September with cases against top developers Barratt, Taylor Wimpey (LON:TW), Countryside and Persimmon, which is Britain's second largest housebuilder.

"This settlement with Aviva and Persimmon is a hugely important step," Housing Secretary Robert Jenrick said, adding that new legislation will protect future homeowners.

The moves come after the CMA in March asked Taylor Wimpey and Countryside to drop unfair ground rent terms. Both said they were cooperating with the regulator.

Persimmon has also agreed to extend the time during which buyers can exchange contracts after reserving a property, and separately said it would cap freehold property prices at 2,000 pounds ($2,796). It stopped selling leasehold homes in 2017.

It added the undertakings formally end the probe into Persimmon, whose shares were down 1.2% to 29.9 pounds at 0754 GMT, while Aviva shares were unchanged.

Aviva's investment arm said in a statement that one of its funds agreed with the CMA to amend terms for around 1,000 leases it had acquired, adding that these represented only 2% of leaseholds held by Aviva Investors Realm Ground Rent Fund.

The CMA said it was investigating Brigante Properties, Abacus Land and Adriatic Land, which bought freeholds from either Countryside or Taylor Wimpey and used the same terms.

Reuters could not immediately reach the three investment groups for comment.

($1 = 0.7154 pounds)

Britain's Persimmon, Aviva to amend home leases after inquiry

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