An investigation into the leasehold property system by the Competition and Markets Authority (CMA) has begun which will investigate permission fees, ground rents and other terms associated with leasehold properties.
These onerous areas were previously highlighted as areas to scrutinise by the CMA’s Chief Executive, Andrea Coscelli. Concerns have also previously been raised by MPs and consumer groups, who have said that the current system has meant that a number of people have been left in a position where they are stuck with houses which they cannot sell or get a mortgage for.
CMA Leasehold Market Investigation
The report will consider if these areas could be deemed as unfair terms when a person enters into a leasehold agreement, and will focus on:
- All areas that could be subject to potential mis-selling. This includes whether those entering into the leasehold agreements are fully aware of all the terms they are agreeing to, particularly in relation to ground rent and the ability to buy the property freehold.
- The potentially unfair fees being charged to leaseholders, such as administration fees, increasing ground rents, permission and service fees.
The CMA will be consulting with developers, lenders and freeholders requesting information in relation to how leaseholds agreements are drawn up, agreed and subsequently maintained by the parties. The report will also take into account the effects that ‘unfair’ terms have on leaseholders and have asked for people to share how they have affected their lives.
Upon announcing the commencement of the study, George Lusty, Senior Director for Consumer Enforcement at the CMA, commented:
“Our investigation will shed light on potential misleading practices and unfair terms to help better protect people buying a home in future.”
How Nelsons Can Help
Helen Wilkinson is a Paralegal in our Dispute Resolution team.
For further information about the subjects discussed in this article, please contact Helen or another member of our team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.