The leasehold property market is back in the news after a report by the Competition and Markets Authority (CMA) claimed that buyers are being treated unfairly and are charged unreasonable fees.
The report comes amid long running concerns raised by consumer groups and MPs about the costly fees and onerous terms in many leasehold contracts.
The CMA said it had uncovered some ‘serious traps’ that buyers find themselves in after being misled by property developers, and warned that it will take action against the companies involved.
Buyers not aware
Some buyers had not been told upfront that the property they were buying was leasehold and were completely unaware of what that actually meant to them.
By the time buyers had found out about the range of ongoing costs they had taken on, such as ground rent charges, it was often too late to pull out of the sale.
Sarah Naylor, head of commercial and property at Atherton Godfrey, advises: “Before you make any offer or commit to buying, find out whether the property you’re interested in is leasehold or freehold. The developer should be upfront about this in the case of a new build, and with an older property you can either ask the estate agent or check the land registry website.
If it is leasehold, pay particular attention to the ground rent fees, as these can increase quite rapidly over the length of a lease. Also check the cost of renewing or extending the lease. These additional costs could have serious implications, particularly for first-time buyers who may already be on a tight budget.
If you already own a leasehold property and were not advised about ground rent fees or the full terms of the lease by the firm of solicitors representing you, you can make a complaint to the firm.”
George Lusty, CMA’s senior director for consumer protection, said in a radio interview that they would be doing all they could to help people out of the traps they have found themselves in.
He added, “If we can attack and challenge these unfair ground rent terms, then they’re invalid – all the money that was collected on them isn’t valid and that has to be paid back.”
The outcome of the CMA investigation could see developers having to change the way they operate, facing legal action where they do not comply.
A spokesperson for the Ministry of Housing, Communities and Local Government said the findings were ‘deeply concerning’ and added: “In the past two years, the government has taken more action to stop unfair leasehold practices than ever before – including reducing ground rents to a peppercorn and banning the sale of new leasehold houses.”
If you would like more information, you can download a guide to buying leasehold property from our website:
The CMA is investigating potential beaches of consumer protection law in the leasehold housing market. If you are directly affected by these issues you can contact the CMA to contribute information to their investigation – visit www.gov.uk/cma-cases/leasehold which contains information about ow to contact the CMA and provides updates on the progress of their investigation.