Author : Mary-Anne Bowring
Yesterday the Competition and Markets Authority (CMA) launched an investigation to find out whether people are being treated fairly when buying their home. It hopes to identifying potential breaches of consumer protection law in the leasehold housing market. Ongoing concerns about the fairness of some leasehold contract terms have turned the spotlight on the sector, with the press frequently reporting on people being stung by costly fees over a long period or finding themselves unable to sell their homes due to onerous lease terms.
In response, the CMA will be looking at two key areas:
Potential mis-selling: have people who have bought a leasehold property been given the information they need to fully understand what they are taking on? This might include, for example, the requirement to pay ground rent over a certain period of time, or whether they have an accurate understanding of how they can buy their freehold.
Potential unfair terms: are people having to pay excessive fees due to unfair contract terms? This will include administration, service, and permission charges where homeowners must pay freeholders and managing agents before they can make home improvements and ground rents, which in some cases can double every 10 years.
The CMA is writing to developers, lenders and freeholders asking them to help the consumer authority understand more about how leaseholds are sold and managed, and the terms their contracts contain. The CMA also wants to understand the impact of this on homeowners. So it is calling on people to share any experiences that may be relevant. If the CMA thinks that a company's practices are misleading or that its contracts contain unfair clauses it could take action to force that company to change how they operate. Responses are needed by 12 July, so if you would like to share your experience of the leasehold market, click here to find out how to have your say.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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