Housebuilders LIED to the buyers of leasehold homes it emerges as competition watchdog prepares to take action against them
Watchdog finds serious issues with the way leasehold homes have been sold Homebuyers were not properly advised on what they were being soldThousands of homeowners could potentially have been mis-sold to as a result
Housebuilders came under fire today as the competition watchdog revealed it has found ‘troubling evidence’ that leasehold homes were mis-sold.
Some 100,000 families across the country are currently trapped in unsaleable homes due to onerous and restrictive terms in their leasehold contracts.
Today, the Competition and Markets Authority said it has evidence that these families may not have been given enough information about what they were signing up to when the homes were sold.
In some of the worst cases, home buyers may have even been lied to when asking direct questions about their leasehold contracts.
The CMA has found ‘serious’ issues with the way leasehold properties have been sold
Last year the CMA revealed it was launching a probe into the way that leasehold homes were sold.
Today it revealed a litany of concerns over the way that developers have sold leasehold properties, including the way that ground rents, fees, and the cost of buying freeholds were and are explained to buyers.
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.
What is the leasehold scandal?
A leasehold agreement gives a tenant the temporary right to occupy land or property, and is granted to the leaseholder by the freeholder of the property.
These leases are long term and it’s not uncommon for them to last for over hundreds of years.
These properties are traditionally flats where there are communal areas and shared facilities that need to be maintained.
The scandal came to light in 2017 after it emerged that property developers had been selling new build houses on a leasehold basis.
These leases often came with extortionate fees and spiralling ground rents attached.
Some developers included punitive ‘doubling clauses’ in sales contracts that hike ground rents at an alarming rate, ultimately trapping people in homes they cannot sell.
Once the purchases were complete, in many cases property developers then sold on freeholds to third party companies without informing the homeowners.
In some of the worst cases, freeholders were slapping homeowners with fees to make elementary amendments to their own homes – £252 to own a pet or £60 to put up a doorbell.
Many who bought a leasehold property claim they were not made aware of what they were buying at the time, thinking that they were buying the property rather than a lease.
‘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.’