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19th March 2021
In September 2020, the Competition and Markets Authority (CMA) launched enforcement action against 4 leading housing developers it believes may have broken consumer protection law in relation to leasehold homes. These included Countryside Properties and Taylor Wimpey, for using possibly unfair contract terms, and Barratt Developments and Persimmon Homes over the possible mis-selling of leasehold homes.
The move to launch enforcement action came after the CMA found troubling evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling.
The CMA has now written to Countryside and Taylor Wimpey outlining its specific concerns that their use of terms that double the ground rent every 10 or 15 years breaks consumer protection law.
As the doubling ground rent clauses are built into contracts, it means leaseholders can struggle to sell or mortgage their homes, and so find themselves trapped and unable to move. These terms can also affect their property rights.
To address the concerns, the CMA is requiring the removal of ground rent terms which it thinks are unfair from all existing Countryside and Taylor Wimpey contracts to make sure they are no longer in breach of the law. The companies must also agree not to use the terms again in any future leasehold contracts.
Countryside and Taylor Wimpey now have the opportunity to respond to the CMA’s detailed concerns and avoid court action by signing formal commitments – known as ‘undertakings’ – to remove the ground rent terms from their leasehold contracts.
The CMA has not yet reached a view on whether Barratt Developments or Persimmon Homes have been involved in any or all of the outlined practices.
As part of its ongoing review of the leasehold sector, the CMA will continue to investigate certain firms – such as investment companies – which bought freeholds from these developers and have continued to use the same leasehold contract terms. Its investigation into Barratt Developments and Persimmon Homes is also ongoing.
For people who own, or are looking to buy, a leasehold property, the CMA has worked with LEASE to produce written and video guidance. The guidance offers advice on a number of issues, including what leaseholders can do if they are faced with fees or charges that they consider unjustified.
For more information on the CMA’s ongoing investigation and for future updates, please visit the leasehold case page.
- CMA videos and guides for consumers who may own or be buying a leasehold property
- Competition & Markets Authority to investigate leasehold mis-selling
- Competition & Markets Authority launches consumer law investigation into leasehold market