The Competition and Markets Authority (CMA) has pledged enforcement action against companies, which break consumer law, after finding evidence of mis-selling and unfair contracts in the leasehold sector.
Andrea Coscelli, chief executive of the CMA, 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.”
The CMA report found that people had been misled about the cost of converting their leasehold to freehold. Others were not informed that a property was leasehold. In the case of some new-build homes, developers had failed to explain the difference between leasehold and freehold.
The report also found excessive fees for routine maintenance of communal areas and disproportionate charges for people making home improvements. Challenging these fees and charges was complex and expensive.
The CMA also highlighted escalating ground rents built into contracts, some of which doubled every 10 years, making it hard for people to sell their homes.
Mark Hayward of estate agents’ industry body, NAEA Propertymark, said: “We have long called for action to be taken to help leaseholders who have been misled and treated unfairly.
“Our research shows three in five (62%) leaseholders feel they were mis-sold and therefore it’s vital enforcement action takes place as soon as possible to give some hope to those who are currently trapped with no easy route out.”
Read more about this story in Property Wire.