Competition regulator to launch investigation into leasehold mis-selling

CMA says it may take enforcement action against developers or managing agents found to have contravened consumer protection laws.

Developers and managing agents may be feeling nervous at the moment after the Competition & Markets Authority (CMA) yesterday revealed that it is to launch an investigation in to the mis-selling of leasehold properties.

The news was broken by CMA Chief Executive Andrea Coscelli in a letter to MP Clive Betts, who chairs the Housing, Communities and Local Government Select Committee.

In it Coscelli (pictured, left) said the CMA’s investigation “may in due course lead to our bringing enforcement proceedings if the evidence we uncover would warrant that”.

“We acknowledge the significant concerns that the Committee has raised about leasehold mis-selling, and whether leasehold contract terms are unfair in relation to, for example, ground rent and permission charges,” he said.

The letter referred to the Committee’s recent report on the leasehold system, which heavily criticised the way that leasehold houses have been sold by developers.

But it also said many apartment leaseholds were unfair too and that overall the system left home owners open to abuse.

Its report also said the problems it discovered included onerous ground rents, high and opaque service charges and one-off bills, unfair permission charges, imbalanced dispute mechanisms, inadequate advisory services, and unreasonable costs to enfranchise or extend leases.

Not transparent

NAEA Propertymark produced its own report on the leasehold scandal last year, which found that 62% of those buying leasehold homes felt they had been miss-sold the property.

Mark Hayward, Chief Executive, says: “We welcome the investigation by the CMA into the mis-selling of leasehold properties as for too long housebuilders and developers have not been transparent enough about what it actually means to buy a leasehold property.”


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