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Agents welcome CMA probe into 'mis-selling' of leasehold properties

The National Association of Estate Agents has welcomed the commitment by the Competition and Markets Authority to investigate the mis-selling of leasehold properties.

NAEA chief executive Mark Hayward 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. 

“Buying a property is a huge undertaking and it should be an exciting time, but for thousands of homeowners, it’s led to financial difficulty as they’ve become trapped in confusing contracts with freeholders.”


An NAEA report has revealed that 62 per cent of leasehold property owners feel they have been mis-sold and 93 per cent say they wouldn’t buy another leasehold property.

The CMA revealed its decision to examine whether leasehold contract terms are unfair in relation to ground rent and so-called ‘permission charges’ in a letter to Labour MP Clive Betts, who chairs the Housing, Communities and Local Government Committee. 

Betts says: “The Housing, Communities and Local Government Committee report into leasehold laid bare a system in urgent need of reform, where homebuyers are vulnerable to exploitation by freeholders, developers and managing agents. 

“Worse still, we heard extensive evidence from leaseholders regarding onerous ground rent terms, high and opaque service charges and one-off bills, unfair and excessive permission charges, and unreasonable costs to enfranchise or extend leases.

“Over the course of the inquiry we heard evidence suggesting that there are a significant number of cases where homebuyers may have been deliberately mis-led about the terms they were signing up to. If the sale of leasehold house has taken place with the homebuyer under the impression that they were buying it freehold, or ‘equivalent to freehold’ as many were told, then action needs to be taken. 

“Equally, if a homebuyer is told they will be able to buy the freehold in a couple of years, only to find out it has been sold on to another company, then this should be investigated.”

Communities Secretary James Brokenshire last month revealed an industry pledge to prevent leaseholders being ‘trapped’ in restrictive and expensive contracts. 

At the time Brokenshire said: “For too long exploitative and unfair leasehold arrangements have placed excessive burdens on homeowners. These have no place in a modern housing market and since becoming Communities Secretary I have repeatedly made clear my ambition to end them.

“That’s why I asked the Competition and Market’s Authority to look into the issue and I am pleased to see it is now taking action.”


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