(qlmbusinessnews.com via bbc.co.uk – – Fri, 28th Feb 2020) London, Uk – –
An investigation into the leasehold property market has found “worrying evidence” that buyers are being treated unfairly and charged unreasonable fees.
The Competition and Markets Authority (CMA) said many homeowners found themselves in “serious traps” after being misled by housing developers.
It said it would take action against firms, calling for a change in the law and for refunds to be paid.
But it has not disclosed any names so far as it continues to investigate.
The CMA found some buyers were not told upfront that a property was leasehold and what this meant.
By the time people found out the realities of owning a leasehold, including regular ground rent charges, they were often unable to pull out of the sale, or would have found it very difficult.
In some cases, ground rents doubled every 10 years. This increase is often built into contracts, meaning people can struggle to sell their homes and find themselves trapped.
George Lusty from the CMA told BBC Radio 5 live that people could be in line for refunds.
“If we can attack and challenge these unfair ground rent terms, then they're invalid – all the money that was collected on them isn't valid and that has to be paid back,” he said.
“We're going to do everything we can to get people out of these really serious traps they find themselves in.
“People aren't able to take mortgages on these properties. They can't sell them, that's a terrible outcome and absolutely devastating for the people affected.”
This could result in firms signing legal commitments to change how they do business, and being taken to court if they do not comply.
The CMA said there should be a ban on the sale of new leasehold houses, while ground rents for new leases should be slashed to zero.
Concerns have long been raised by MPs and consumer groups about unfair leasehold contracts, with costly fees or onerous terms, prompting the CMA to announce the investigation last year.
Campaigners have called for leaseholds to be abolished, while some developers say they still have a place.