CMA launches action against developers

In February, the CMA published a scathing interim report, where it found ‘worrying evidence that people who buy leasehold properties are being misled and taken advantage of’.

At the time, it said it would take enforcement action against companies involved in mis-selling and, if necessary, take legal action.

These enforcement proceedings are based on two key areas: the alleged mis-selling of leasehold homes and unfair contract terms.

The CMA says it has written to Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey asking for further information.

It says possible outcomes could include requiring legal commitments from the developers to change their terms or taking them to court.

What is the CMA investigating?

The watchdog says it has found evidence of the following possible breaches of consumer protection law:

Mis-selling of leasehold homes

Unfair contract terms

The CMA says it will also be investigating some firms who bought freeholds from developers and have continued to use the same unfair leasehold contract terms.

Government and Law Commission action on leasehold

The CMA’s findings echo the crippling problems with leasehold that we highlighted in our investigation back in June 2018.

Since then, the government has pledged to ban the selling of leasehold new-build houses with punitive ground rents, but has done little to offer redress to those already stuck with unsellable properties.

In July, the Law Commission recommended that leasehold be replaced with commonhold for flats.

It also said homeowners should be given greater rights to buy their freehold for an affordable price and ground rents should be set to zero. The government is considering these recommendations.