Competition watchdog’s move to take enforcement action in leasehold sector welcomed by Deeside MP
A competition watchdog investigation has found “troubling evidence” of potential mis-selling in the leasehold housing sector and is set to launch enforcement action.
It’s a move welcomed by Alyn and Deeside MP Mark Tami who previously brandished the leasehold practice a “scam.”
Mr Tami said he will continue to press for “far stronger action” from parliament and wants a ban on leasehold as a tenure.
The Competition and Markets Authority (CMA) probe found homeowners having to pay escalating ground rents meaning people can often struggle to sell their homes and find themselves trapped.
It also found house buyers were not being told upfront that a property is leasehold and what that means.
Traditionally, houses are sold as freehold with the buyer having complete control over the property, those sold as leasehold mean the buyer if effectively a tenant on a very long term rental.
When buying their home, some people were told the freehold would cost only a small sum, but later down the line this price had increased by thousands of pounds with little to no warning.
Some developers are failing to explain the differences between leasehold and freehold when directly asked, and some actually tell potential buyers that there is no difference.
By the time people find out the realities of owning a leasehold, including the regular charges to be paid, they are often unable to pull out of the purchase, or would face significant difficulties if they tried to do so.
Alyn and Deeside MP Mark Tami, who sat on an all-party parliamentary leasehold reform group, said:
“The CMA’s assessment of the leasehold scandal serves only to confirm what the people on the receiving end of these companies have known for some time- the system is broken.
Whilst the CMA’s plans to take enforcement action are both welcome and overdue, it’s not just the freehold-owning companies at the worst end of the market who are the problem but the ones operating legally but immorally.
The solution is clear- to ban leasehold as a tenure, like Labour has proposed.
I will continue to press for far stronger action in Parliament, and to support constituents in calling on freehold-owning companies to do the right thing and return the freeholds to householders.”
CMA says it will launch direct enforcement against those it believes have broken consumer protection law, the watchdog hasn’t named individual companies as yet.
It adds this could result in firms signing legal commitments to change how they operate.
Andrea Coscelli, the CMA’s Chief Executive, said: “We have found worrying evidence that people who buy leasehold properties are being misled and taken advantage of.
Buying a home is one of the most important and expensive investments you can make, and once you’re living there you want to feel secure and happy. But for thousands of leasehold homeowners, this is not the case.
We’ll be looking carefully at the problems we’ve found, which include escalating ground rents and misleading information, and will be taking our own enforcement action directly in the sector shortly.”
All information relating to this investigation can be found on the leasehold case page.
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