Watchdog drops investigation into builder’s leasehold sales

The Competition and Markets Authority (CMA) has closed its investigation into alleged mis-selling of leasehold houses by Barratt Homes.

It is the latest development in the watchdog’s investigation of the leasehold housing market.

The investigation into the sector was first launched in June 2019, looking at potential leasehold mis-selling and whether leasehold contract terms are onerous and unfair in relation to ground rent, permission and other charges.

The CMA announced in September 2020 that it was launching enforcement action involving four housing developers including Barratt Homes that it believes may have broken consumer protection law in relation to leasehold homes.

But the CMA said in an update yesterday: “Following careful scrutiny of the evidence gathered, the CMA concluded that it was insufficient to support a clear legal case for the CMA to secure collective redress for Barratt leaseholders under its consumer law powers. 

“This was unlikely to change with further investigation and consequently continuing with the case would not be a good use of resources. Barratt’s sales practices have changed, and they no longer sell leasehold houses.”

Investigations into Taylor Wimpey, Countryside and Persimmon have already concluded, with each committing to remove doubling ground rents.

Persimmon has also said it will let leasehold house owners purchase their freehold at a discounted price.

Separately, the CMA said it is “positively engaging” with firms who purchased freeholds from Taylor Wimpey to secure formal commitments from freeholders to remove doubling clauses from their leases, and any doubling terms that were converted to be based on the Retail Price Index (RPI). 

It follows Taylor Wimpey’s commitment to the CMA to help get such clauses removed at no cost to leaseholders.