CMA investigates mis-selling of leasehold properties
Despite the initial refusal, the Competition and Market Authority (CMA) has finally began to investigate possible mis-selling in the leasehold property market, reports The Times and The Daily Mail online.
This decision was made after up to 100,000 families were left with crippling ground rents.
The investigation is looking at whether people who were sold a leasehold property received all the necessary information to fully understand their future obligations.
All leasehold buyers should have been informed about several issues, such as requirement to pay ground rent.
It has been revealed that many developers have been selling leasehold properties with high fees and spiraling ground rents.
Some of the contract clauses included ground rents doubling every decade. This essentially trapped the homeowners in their poor situation, as they were unable to sell on their properties.
The CMA will now be writing to freeholders, lenders and developers to comprehend the state of the leasehold market.
Additionally, it calls upon homeowners in this situation to share their experience, so that it can understand the impact of such practices.
Shockingly, a recent survey shows that 62% of leasehold homeowners felt like they were mis-sold.
The CMA’s investigation will also look into whether people are having to pay excessive fees due to unfair contract terms. These can include service, administration and ‘permission’ charges.
The ‘permission fees’ refer to homeowners having to pay managing agents and freeholders to make home improvements.
If the CMA believes a company is being misleading or presents contract which includes unfair clauses, it will enforce operational changes for the company.
This is truly great news to leasehold property owners. Housebuilders and developers will now have to own up to their lack of transparency in selling leasehold houses. It is about time the CMA put a stop to this culture of consumer exploitation.
Buying a house is one of the most expensive purchases you will make in your life. That is why it is extremely important to make the right, informed decision. Unfortunately, not everyone has your best interest in mind.
If you have been sold a leasehold property and have not been fully informed of your obligations, or you have suffered because of escalating ground rent charges, you may be entitled to make a claim.