CMA launches action against housebuilders
The Competition and Markets Authority (CMA) has launched
enforcement action against Barratt Developments, Countryside, Persimmon and
Taylor Wimpey relating to leasehold contracts and “potential mis-selling”.
The CMA said it was bringing action, having “uncovered troubling evidence
of potentially unfair terms concerning ground rents in leasehold contracts and
potential mis-selling”. It stated it was concerned that leasehold home owners
may have been “unfairly treated and that buyers may have been misled by
developers”.
The four large housebuilders have been approached for:
• Mis-selling – including developers “failing to explain clearly
exactly what ground rent is, whether it increases over time, when increases
will occur and by how much”; people being misled about the availability of
freehold properties and the cost of converting leasehold to freehold ownership, the CMA said. The CMA is also concentrating on unfair sales tactics, such as
“unnecessarily short deadlines to complete purchases” to secure a deal, with
buyers being rushed into buying properties they may not have purchased, given more time.
• Unfair contract terms on ground rents – Contract terms that see
home owners paying “escalating ground rents, which in some cases can double
every ten years”. With this increase built into contracts, the CMA said people
could struggle to sell their homes.
The CMA also said it would be probing 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 has now written to the housebuilders outlining its concerns and
asking for information.
In response, Barratt said: “Barratt Developments notes the
announcement made by the UK Competition and Markets Authority that it is
opening an enforcement case as part of its ongoing investigation in relation to
the sale of leasehold homes. The group is committed to putting its customers
first and will continue to co-operate with the CMA whilst it completes its
investigation.”
Taylor Wimpey said: “We note the announcement from the Competition
& Markets Authority (CMA) that they are opening an enforcement case against
Taylor Wimpey and other leading housing developers in connection with the sale
of leasehold homes and potential breaches of consumer protection laws."
“The board takes this very seriously and Taylor Wimpey will
continue to fully co-operate 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."
Countryside commented: “The board of Countryside notes today's
statement from the Competition & Markets Authority (CMA). 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."
Persimmon was also approached for comment.
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