The Competition and Markets Authority (CMA) has formally launched its investigation into the UK’s home buying process, focussing on the ‘fairness, clarity and presentation of some leasehold contract terms’.
Its intention to launch an investigation was revealed in parliament last month after the CMA’s Chief Executive sent a letter to MP Clive Betts, who is chair of the main parliamentary housing committee.
This investigation has now started and will focus on two key areas. The most controversial is its decision to look at potential mis-sold leaseholds in the past to ensure people have understood the risks and obligations they have been exposed to including increasing round rents.
But the CMA is also to look at unfair terms including the ‘permission charges’ leaseholders have been billed when making changes to their properties.
“Our investigation will shed light on potential misleading practices and unfair terms to help better protect people buying a home in future,” says George Lusty, Senior Director for Consumer Enforcement at the CMA (left).
Mark Hayward, Chief Executive of NAEA Propertymark, says: “For too long, house builders and developers have not been transparent enough about what it actually means to buy a leasehold property which has led to 62 per cent feeling like they were mis-sold leaseholds.
“Buying a property is a huge undertaking and it should be an exciting time, but for thousands of home owners, it’s led to financial difficulty as they’ve become trapped in confusing contracts with freeholders.
“It’s encouraging to hear the CMA will take enforcement action against any company found to be misleading consumers.”