CMA leasehold investigation hits housebuilders

The Competition and Markets Authority (CMA) has opened enforcement cases against a number of major UK construction firms on the grounds that they may have mis-sold leasehold properties and used unfair sales tactics to pressure buyers. The firms named by the CMA were Barratt Developments (LON:BDEV), Countryside Properties (LON:CSP), Persimmon (LON:PSN), and Taylor Wimpey (LON:TW.), which have seen respective share price drops of 5.04%, 4.24%, 4.13%, and 4.10% (as of 16:00 BST).

The regulator alleges that the use of escalating ground rents may constitute unfair practices and that buyers misled about the availability of freehold properties as well as the costs of acquiring the freehold at a later date. The investigation will proceed and the CMA may require the companies involved to alter their business practices or face legal action in the courts. Taylor Wimpey, Barratt Developments, and Countryside Properties have all released statements saying that they will cooperate with the regulator.

CMA Chief Executive Andrea Coscelli commented: “It is unacceptable for housing developers to mislead or take advantage of homebuyers. That’s why we’ve launched today’s enforcement action.

“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.”