The company has agreed to end the doubling of ground rents every 10 to 15 years following an investigation by the Competition and Markets Authority.
Property developer Countryside has agreed to scrap unfair contracts that saw leaseholders subjected to ground rents doubling every 10 to 15 years.
The decision follows a Competition and Markets Authority (CMA) investigation into the industry-wide practice that has already seen rivals remove the terms.
The watchdog said it hopes agreements can be reached with other developers, and warned court action could follow if others do not fall into line.
Countryside property owners will now see ground rent returned and remain at the level when the homes were first sold. The company also confirmed it no longer sells leasehold homes with doubling ground rents.
CMA officials first launched an investigation in September last year, with the watchdog warning the increases left households struggling to sell or mortgage their home and put their property rights at risk.
Countryside will also remove terms that were originally doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index (RPI).
The CMA also deemed that arrangement was also potentially unfair and should be fully removed so that ground rent did not increase at all.
Chief executive Andrea Coscelli said: “Leaseholders with Countryside can now breathe a sigh of relief knowing they will no longer be forced to pay these doubling ground rents.
“No-one should feel like a prisoner in their home, trapped by terms that mean they can struggle to sell or mortgage their property.
“We will continue to robustly tackle developers and investors – as we have done over the past two years – to make sure that people aren’t taken advantage of.
“Other developers, such as Taylor Wimpey and freehold investors now have the opportunity to do the right thing by their leaseholders and remove these problematic clauses from their contracts.
“If they refuse, we stand ready to step in and take further action – through the courts if necessary.”
Taylor Wimpey, Barratt Developments and Persimmon Homes have all faced the same investigation as Countryside into the alleged mis-selling of leasehold homes.
In June, the CMA secured commitments from Persimmon and investor Aviva to remove the ground rent terms and confirmed it has written to other freehold investors asking for commitments.
Housing Secretary Robert Jenrick said: “This settlement with Countryside will mean thousands more leaseholders are given the fair treatment they deserve and marks the third major agreement with leading UK developers and investors. I strongly urge others to follow suit and end these historic practices.
“We will continue to support leaseholders who may have been mis-sold properties and our new legislation will put an end to this practice for future homeowners by restricting ground rents in new leases to zero.”
As part of its review of the leasehold sector, the CMA is continuing to investigate investment groups Brigante Properties, Abacus Land and Adriatic Land, after it wrote to the firms earlier this year setting out its concerns and requiring them to remove doubling ground rent terms from their contracts.
The CMA’s investigation into Barratt Developments and Taylor Wimpey is also continuing.