Friday 4 September 2020 8:29 am

Watchdog opens probe into major homebuilders over leasehold practices

The Competition and Markets Authority (CMA) today said it was opening enforcement cases against four of the UK’s biggest housebuilders over suspicions they may have broken consumer protection law in relation to leasehold homes.

The CMA today said it was opening enforcement actions focusing on the practices of Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey.

The CMA said it had “uncovered troubling evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling”.

Read more: CMA considers enforcement action against developers over ‘troubling’ leasehold mis-selling claims

It said it was “concerned that leasehold homeowners may have been unfairly treated and that buyers may have been misled by developers”.

The CMA said it suspected consumers may have been misled in connection with ground rents on leasehold properties, misled about the availability of freehold properties and misled about the cost of converting leasehold to freehold.

The watchdog said it was concerned developers had used unfair sales tactics – such as unnecessarily short deadlines to complete purchases – to pressure people into buying properties.

The CMA said the use of unfair contract terms mean homeowners have to pay escalating ground rents, which in some cases can double every 10 years.

The CMA also said it was looking into further ground rent increases based on the retail price index and said it “may take enforcement action should it find evidence of unfair practices in relation to these”.

The watchdog said it had written to Barratt, Countryside, Persimmon, and Taylor Wimpey outlining its concerns and requiring information.

It threatened to take the companies to court if they do not offer legal commitments they will change the way they do business.

Read more: UK house prices: Will the surge last or is it a bubble?

Andrea Coscelli, CMA chief executive, said: “It is unacceptable for housing developers to mislead or take advantage of homebuyers. That’s why we’ve launched today’s enforcement action. 

“Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that there has been mis-selling or unfair contract terms, these will not be tolerated.”

Barratt said: “We are committed to putting our customers first and will continue to cooperate with the CMA whilst it completes its investigation.”

Persimmon said: “A proportion of our properties were sold on a leasehold basis in the past.

“Following consultation with government, stakeholders and customers we took the decision to stop selling leasehold houses where Persimmon owns the land freehold in 2017.

“Any customers of a Persimmon leasehold property in the last six years have been given the right to buy their lease at below market value and many have done so.

“We look forward to engaging fully with the CMA on this issue as they continue their investigation.”

Taylor Wimpey said: “Taylor Wimpey will continue to fully cooperate with the CMA, provide the further information to be requested by the CMA in the coming weeks and work with them to better understand their position.”

Countryside Properties was contacted for comment.

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