The Competition and Markets Authority (CMA) has announced it has found evidence of mis-selling of leasehold homes and it will launch “enforcement action”.
The CMA said it is now completing all the “necessary legal work” to launch direct enforcement action against companies it believes have broken consumer protection law.
This could result in firms signing legal commitments to change how they do business. If firms fail to make the required changes, the CMA could take action through the courts to make them comply with the law.
According to NAEA Propertymark, homeowners are being “forced” to pay “escalating” ground rents, misled about the cost of converting their leaseholds to freehold and not being told upfront that a home is leasehold.
Additionally, the trade body claims homeowners are also being charged “excessive and disproportionate fees” for costs such as maintenance to common parts, or for making home improvements.
Propertymark said it welcomes the CMA’s move to launch enforcement action, and Mark Hayward, NAEA Propertymark chief executive, added: “We have long called for action to be taken to help leaseholders who have been misled and treated unfairly.
“For too long, house builders and developers have not been transparent enough about what it actually means to buy a leasehold, which in turn has meant many owners have been faced with escalating ground rents and unreasonable fees, leading them into financial difficulty.
He continued: “Our research shows three in five (62%) leaseholders feel they were mis-sold and therefore it’s vital enforcement action takes place as soon as possible to give some hope to those who are currently trapped with no easy route out.”