The Competition and Markets Authority (CMA) has escalated an investigation into four of the UK’s largest housebuilders over potential mis-selling of leasehold contracts and unfair terms concerning ground rents.
The CMA has written to Persimmon (PSN), Barratt Developments (BDEV), Taylor Wimpey (TW.) and Countryside Properties (CSP) asking for further information, stating that it had concerns leasehold homeowners may have been unfairly treated and that buyers may have been misled by developers.
In July, the government’s legal advisory body unveiled a package of measures aimed at reforming the leasehold market, which would make it easier and cheaper for leaseholders to buy their property outright or extend their lease.
The regulator raised concerns that developers had failed to clearly explain what ground rent is, whether it increases over time, when increases will occur and by how much, and that they had used unfair sales tactics – such as unnecessarily short deadlines to complete purchases – to secure a deal.
Ground rents in some cases double every 10 years and make it difficult for a homeowner to sell-on their property. The CMA said it would also be looking further into ground rent increases based on the Retail Price Index (RPI) and may take enforcement action should it find evidence of unfair practices in relation to these.
It also said it had found evidence that some people were told properties on an estate would only be sold as leasehold homes, when they were in fact later sold as freeholds to other buyers.
Persimmon said a proportion of its properties were sold on a leasehold basis in the past and that following consultation with government, stakeholders and customers it took the decision to stop selling leasehold houses where Persimmon owns the land freehold in 2017. “Any customers of a Persimmon leasehold property in the last six years have been given the right to buy their lease at below market value and many have done so. We look forward to engaging fully with the CMA on this issue as they continue their investigation,” the group said.
Taylor Wimpey noted the announcement, stating: “The board takes this very seriously and Taylor Wimpey will continue to fully cooperate with the CMA, provide the further information to be requested by the CMA in the coming weeks and work with them to better understand their position.”
Barratt Developments said: “The group is committed to putting its customers first and will continue to cooperate with the CMA whilst it completes its investigation.”
Countryside Properties said, "we are committed to resolving this issue to the satisfaction of our customers and will continue to co-operate fully with the CMA's ongoing investigation".
However, the CMA reiterated that it should not be assumed at this stage of the investigation that the businesses had been involved in “any or all of the outlined practices”.
