Competition watchdog launches investigation into leasehold market
The Competition and Markets Authority (CMA) has launched a formal investigation into leasehold market contracts and sales practices.
The CMA will investigate whether the public has been fairly treated when it comes to buying a home following concerns over fairness, clarity and presentation of contract terms on leasehold properties.
The new investigation will focus on two key areas including potential mis-selling of leasehold property, and whether people who have bought a leasehold property are given the information they need to fully understand the obligations they are taking on.
The second aspect of the investigation will focus on whether leaseholders have been forced to pay excessive fees due to unfair contract terms. This will include administration, service, and ‘permission’ charges – where homeowners must pay freeholders and managing agents before making home improvements – and ground rents, which in some cases can double every 10 years.
READ MORE
George Lusty, senior director for consumer enforcement, said: “Buying a home is one of the most expensive and important purchases a person can make.
"So, it’s essential they fully understand the contract they are signing – including whether they will have to pay more than they bargained for.
“Our investigation will shed light on potential misleading practices and unfair terms to help better protect people buying a home in future.”
The CMA is writing to companies across the sector – including developers, lenders and freeholders – requiring information to understand more about how leaseholds are sold and managed, and the terms their contracts contain.
