(qlmbusinessnews.com via news.sky.com– Fri, 4th Sept 2020) London, Uk – –
The CMA launches enforcement action, saying it is “unacceptable” for housing developers to take advantage of home buyers.
Four of the country's biggest housing developers could face court action after the competition watchdog found evidence they misled leasehold buyers.
The Competition and Markets Authority has written to Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey after uncovering “troubling evidence of potentially unfair terms”.
The regulator accused developers of misleading buyers, trapping them in leasehold agreements with spiralling ground rents.
CMA chief executive Andrea Coscelli 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.”https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.htmlAdvertisement
If you own the freehold, it means that you own the building and the land it stands on in perpetuity. But leaseholders only have a lease from the freeholder to use the home for a number of years.
A leaseholder has to pay ground rent to the freeholder, as well as a service charge for things such as maintaining common areas.
The CMA said developers had not clearly explained ground rent to buyers and that some ground rents were set to double every year.
When potential buyers asked if they could become freeholders, some were told the properties were only available on a leasehold basis. But the CMA said the same houses were later sold as freehold to other buyers.
Some leasehold buyers were also told it would be cheap to upgrade to freehold, only to find that the price later increased by thousands of pounds.
Mr Coscelli said: “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.”
The CMA said that it would take the companies to court if needed, but this could be avoided if they committed to changing the way they do business.
Barratt said: “The group is committed to putting its customers first and will continue to cooperate with the CMA whilst it completes its investigation.”
Taylor Wimpey said: “The board takes this very seriously and 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.”
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.”