Landlords could be unshackled from paying unfair and costly charges as the competition watchdog launches a probe into how the leasehold property market works.
The Competition and Mergers Authority (CMA) fears landlords and other homebuyers are locked into crippling charges that managing agents and freeholders fail to properly explain when a home is purchased.
Launching an investigation into the leasehold market, the CMA is urging landlords to tell them about their experiences with leasehold property contracts.
The inquiry follows concerns voiced by consumer groups about potential misselling and unfair contract terms.
The CMA is worried many buyers do not have the information they need to understand the true cost of their leasehold purchase.
In some cases, property owners do not realise contracts double the value of ground rents every 10 years.
Other terms are also unfair, says the CMA, leading to some buyers paying excessive fees for buying out the leasehold and ongoing administration, service and permission charges – the payments homeowners make to managing agents or freeholders to manage or improve their homes.
The CMA is calling for developers, freeholders and homebuyers to tell them about their leasehold contracts, and if the terms are considered misleading or unfair, enforcement action could follow.
George Lusty, the CMA’s senior director for consumer enforcement, said: “Buying a home is one of the most expensive and important purchases a person can make. So, it’s essential they fully understand the contract they are signing – including whether they will have to pay more than they bargained for.
“Our investigation will shed light on potential misleading practices and unfair terms to help better protect people buying a home in future.”
The inquiry closes on July 12 – more information about responding is on the CMA web page
Let’s hope George Lusty’s brief extends further than just “people buying a home in the future”. Many of us are in the invidious position of trying to get rid of expensive freeholders who employ even more expensive experts to frustrate our efforts to take control of our blocks. Also, many lessees have been caught out by the change in the ‘marriage value’ rules, whereby the previous point in time where mortgages for buyers becomes difficult / impossible to obtain (ie 60 years) has now become 80 years. In my own case it will now cost around £10, 000 to take the lease back to 125 years as a result, & every year that passes makes this process even more costly. This change happened almost overnight with no prior warning, & must affect many landlords around the country. I fear this investigation will have an ‘implementation point’ that will ignore those of us already suffering through no fault of our own.