Competition watchdog launches enforcement action over potential mis-selling of leasehold homes

Four of the UK’s largest house builders could face legal action after the Competition and Markets Authority (CMA) revealed it has launched enforcement action over the way leasehold homes were sold.

The CMA said it has uncovered “troubling evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling” by Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey.

The regulator said the mis-selling included poor explanations of ground rents and the availability and cost of freeholds as well as unfair sales tactics.

It is also concerned about unfair contract terms surrounding escalating ground rents that make it harder for owners to sell their homes.

Possible outcomes include legal commitments from the companies to change the way they do business, or if necessary, the CMA could take firms to court, the regulator’s announcement said.

The CMA has written to Barratt, Countryside, Persimmon, and Taylor Wimpey outlining its concerns and requiring information.

All four developers said they would cooperate with the CMA investigation.

The CMA said it will also be investigating certain firms who bought freeholds from the developers under investigation and have continued to use the same unfair leasehold contract terms.

Alongside its enforcement action, the CMA is also sending letters to a number of other developers, encouraging them to review their practices to make sure they are treating consumers fairly and complying with the law.

Andrea Coscelli, chief executive of the CMA, said: “It is unacceptable for housing developers to mislead or take advantage of homebuyers.

“Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that there has been mis-selling or unfair contract terms, these will not be tolerated.”

Leasehold reform campaigners backed the move.

Anna Bailey, chief executive of the Leasehold Group, said it was good to see the CMA finally showing its teeth.

She said: “We have been fighting for the rights of leaseholders for 18 years and finally we are starting to see positive action following the largely ineffective pledge made by builders.

“There has never been any justification for selling new houses as leasehold, it has simply been a way for house builders to enhance their profits at the expense of buyers.”

Sebastian O’Kelly, spokesman for the Leasehold Knowledge Partnership, added: “For years we were saying that plc house builders were ripping off their own customers with predatory ground rents and other games with leasehold tenure, and now the CMA agrees with us and is taking enforcement action.

“This was abusive corporate behaviour on a massive scale, and it is utterly shameful that professionals recommended by the plc house builders – solicitors and valuers – went along with it.

“As well as their customers, the plc house builders ripped off the rest of us as many of these blighted homes were bought with Help to Buy subsidies, and taxpayers are unlikely to get that money back.

“It is awful that these monopolising companies are poised to get further public subsidy from our ever-credulous government over its ambitious house building plans.”

NAEA Propertymark also supported the CMA’s action.

Mark Hayward, chief executive of the agency trade body, said: “For too long house builders and developers have not been transparent enough about what it means to buy a leasehold property, leaving many in financial difficulty as they have become trapped in confusing contracts with their freeholder.”


Email the story to a friend


  1. Robert_May

    I don’t understand  why the CMA are going after what is effectively the vendor when there are effectively 2 other parties that should have provided the purchaser from an un-sound purchase; the mortgage lender and the conveyancer acting for the buyer.

    There are case law precedents that set out the duties of those advising clients- if those duties have been compromised  caveat emptor says  has  clearly defined where responsibility lies.


    Its probably worth resolving who is actually at fault before charging after the builders because there the ones with the money.


    There might be things builders have to do such as replace cladding but then cladding   manufacturers and  building control will get rolled up into that argument for allowing the cladding to be manufactured and installed.


    The mathematically  impossible lease problem is going to be  a fascinating challenge to watch. I can’t see how anything short of  a government imposed solution will resolve those

    1. #ImpressiveConveyancing

      Daft that the mis-selling can go past SO MANY parts before it gets to conveyancers:

      – The Government ( for not (not legislating the details the CMA wanted highlighted to the public)

      – Rightmove etc ((not legally required to publish the details the CMA wanted highlighted to the public)

      _ Estate Agents (not legally required to publish the details the CMA wanted highlighted to the public)

      – Surveyors (for their surveys not stating he details the CMA wanted highlighted to the public)

      – Mortgage Advisers (not legally required to require the CMA wanted highlighted to the public)

      – Mortgage Lenders (not legally required to publish in their mortgage ofefrs the details the CMA wanted highlighted to the public)

      – The Public – for not reading what they are buying into

      ….and so it gets right to the very end, 28 days away from locking in a buyer and the conveyancer is left.


      1. Robert_May

        All of the mis- selling  if there are any will come out in the wash but as I see it   the system that valued the property for mortgage dropped the ball on claddings, the conveyancers dropped the ball on failing to spot the effects of compounding lease clauses.

        The valuers or  auto approval system used by lenders probably assumed claddings, installed to building  reg standards were fire safe and at a granular level of an individual mortgage application it  wasn’t even considered pre Grenfell

        The buyers had a duty to themselves but could also reasonably rely on the people they were paying fees to to protect and advise them.


        1. #ImpressiveConveyancing

          There won’t be many conveyancers whose Report precedent didn’t state the ground rent and the increase to it.

          Hence why conveyancers are not under the microscope. They were the only ones to draw the clients attention to it.

          And it wouldn’t make sense to blame conveyancers anyway as they got involved right at the last stage. Far too many other culprits involved months before it got to them.

          (Not even planning consent Restricted the charge on the rent….it could have.)

          The next real scandal to hit conveyancing?………the fees that are demanded of conveyancers to be on mortgage panels. Watch this space…….and how retrospective repayment will be ordered of the charging businesses.

          1. aSalesAgent

            And it wouldn’t make sense to blame solicitors anyway as they got involved right at the last stage. Far too many other culprits involved months before it got to them.
            For any property transaction, a buyer’s conveyancer is one of the few stakeholders who actually work for them and not the seller (i.e. developer, in this instance); therefore, I would say they are as much to blame as any other property professional, if not more.
            Conveyancers have a responsibility to protect their client (and any mortgage lender) and make sure they are clear on what risk they are taking on. In my opinion, it’s not enough to simply send a report stating there is an escalating ground rent clause and then expect the client (more often than not, a first-time buyer?) to understand how that impacts them.
            If conveyancers acting for a buyer (and lender) were not explaining how compounding lease clauses can negatively effect a property’s resalability, how can intermediaries (e.g. agents and brokers) be expected to do so earlier in the transaction? The Property Ombudsman does not expect estate agents to research issues that are outside their line of business, and which a surveyor or conveyancer would investigate.
            Going forwards, if an agent becomes aware that a house they are marketing is leasehold, or that a leasehold property has an escalating ground rent, absolutely should they report this material information to prospective buyers. I feel it would be unjust to retroactively punish agents for not doing so before the issues became widely reported. However, I feel it is right that where it’s found that terms concerning ground rents are unfair, the developer, and the conveyancer acting for the buyer, should be investigated.

  2. TPCTom

    It’s true that there is no justification for a house to be sold as leasehold – other than lining developer pockets even further.

    But, the property I imagine is advertised clearly as leasehold (or at least should be)

    would be advertised by an agent as leasehold (if agent advertising is applicable)

    Mortgage broker would advise is leasehold

    Mortgage lender would ask for lease details

    Conveyancer would point out is leasehold


    You’d think by this point the buying party would be aware the property they are buying is, in fact, leasehold and have been advised of the pitfalls of buying leasehold over freehold.

    If all of these people are missing the point we have bigger issues…


You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.