NAEA Propertymark has thrown its weight behind a Competitions and Markets Authority investigation into whether consumer protection law has been broken in the sale of some leasehold homes.
On Friday we reported that the CMA was probing four specific housebuilders and a series of other unnamed companies following the discovery of what it calls “troubling evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling.”
Mark Hayward, the NAEA chief executive, says: “It’s promising to see the CMA is taking enforcement action against four house builders on the grounds of mis-selling and unfair contract terms in relation to leasehold homes … for too long house builders and developers have not been transparent enough about what it means to buy a leasehold property, leaving many in financial difficulty as they have become trapped in confusing contracts with their freeholder.”
Last year a Propertymark report into the issue revealed that 62 per cent of leasehold property owners felt they were mis-sold and a further 93 per cent wouldn’t buy another leasehold property.
The CMA investigation has no time limit and the authority says likely penalties - if wrongdoing is found - include legal commitments from the companies to change the way they do business, or if necessary, the authority could take firms to court.
Housing Secretary Robert Jenrick tweeted over the weekend: “Shameful practices of this kind have no place in our housing market and we are going to put an end to them.
“The government asked the CMA to conduct this investigation and I strongly welcome the action to tackle mis-selling in the leasehold sector and want to see homeowners who have been affected by crippling ground rents swiftly obtain the justice and redress they deserve.
"Developers and freeholders must rectify the problems and ensure these disgraceful practices never happen again. We will be introducing legislation to restrict ground rents in new leases to zero and outlaw new leasehold houses.
“We are also considering the important work of the Law Commission on wider reforms to leasehold such as enfranchisement rights and will be responding in due course.”