The Competition and Markets Authority had last September launched an investigation into four housebuilders - Barratt Developments, Persimmon Homes, Taylor Wimpey and Countryside - in relation to possible mis-selling of leasehold homes and high ground rents.

"These ground rent terms can make it impossible for people to sell or get a mortgage on their homes, meaning they find themselves trapped. This is unacceptable," said CMA Chief Executive Andrea Coscelli.

The two homebuilders can respond to the watchdog's concerns and avoid court action by signing formal commitments known as 'undertakings' to remove the ground rent terms from their leasehold contracts.

While the investigation into Barratt and Persimmon was on, the CMA warned it would take further action including judicial proceedings if Taylor Wimpey and Countryside did not address its concerns.

Taylor Wimpey, UK's third-largest homebuilder, said it intended to move to the next stage of formal consultation and would continue to cooperate with the regulator.

Countryside did not immediately respond to a Reuters request for comment.

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Subhranshu Sahu and Arun Koyyur)