Longstanding Issues in the Leasehold Market

Bad practice in the leasehold market is nothing new for those living or working in the sector. However, today’s announcement that the findings of the Competition and Markets Authority (CMA) probe will lead to enforcement action is a hopeful sign for leaseholders. In case you missed it, the CMA launched an investigation into leasehold mis-selling in June last year.

Key Issues Identified by the CMA Investigation

The CMA’s research focused on four major issues affecting leaseholders:

• Ground rents: Some homeowners must pay escalating ground rents that can double every 10 years—making it difficult to sell their homes.
• Cost of the freehold: Many leaseholders have been misled about how much it would cost to purchase their freehold.
• Misleading information: Some buyers were not informed upfront that their property was leasehold, only realizing later that they would be responsible for ongoing charges.
• Unreasonable fees: Leaseholders often face excessive charges for maintenance, shared spaces, or home improvements, and challenging these costs can be difficult and expensive.

CMA Takes Action Against Unfair Leasehold Practices

The CMA gathered evidence from various industry stakeholders and found that leaseholders were misled and exploited. As a result, the CMA will now launch enforcement proceedings against companies violating consumer protection laws. This could mean:

• Legal commitments from firms to change their practices
• Potential legal action if companies fail to comply

The Push for Long-Term Leasehold Reform

Beyond enforcement, the CMA also supports legal reforms to improve the leasehold system. However, legal change takes time—too long for those already trapped in properties they cannot afford or sell due to high ground rents and freehold purchase costs.

Consumer Guidance for Leaseholders

While waiting for policy changes, the CMA is working on consumer advice for current and potential leaseholders.

This will include:

• Tips for dealing with excessive fees
• Guidance on challenging unjustified servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charges

Many buyers don’t fully understand leasehold costs before purchasing, and developers and agents often fail to provide transparent information.

Will the CMA’s Actions Be Enough?

The leasehold market needs change—and quickly. The CMA’s investigation and enforcement measures are a step in the right direction, but will they be enough? Let’s hope their actions bring real improvements for leaseholders struggling with unfair fees and contracts.