CMA launches investigation into housebuilder giants

The Competition and Markets Authority (CMA) is launching enforcement action involving four leading housing developers it believes may have broken consumer protection law in relation to leasehold homes.

The CMA says it is opening enforcement cases focusing on certain practices of Coalville-based Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey

The move comes after the CMA uncovered “troubling” evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling. It is concerned that leasehold homeowners may have been unfairly treated and that buyers may have been misled by developers.

The CMA will also be looking further into ground rent increases based on the Retail Price Index (RPI) and may take enforcement action should it find evidence of unfair practices in relation to these. In particular, the CMA says it is concerned about the fairness of escalating ground rent terms linked to RPI and that these are not always effectively explained by developers when discussing RPI-based ground rent with prospective homeowners.

The CMA will also be investigating certain firms who bought freeholds from these developers and have continued to use the same unfair leasehold contract terms.

The CMA has now written to Barratt, Countryside, Persimmon, and Taylor Wimpey outlining its concerns and requiring information.

How the case proceeds will depend on the CMA’s assessment of the evidence. Possible outcomes include legal commitments from the companies to change the way they do business, or if necessary, the CMA could take firms to court.

Andrea Coscelli, CMA chief executive, said: “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.”

Alongside its enforcement action, the CMA is also sending letters to a number of other developers, encouraging them to review their practices to make sure they are treating consumers fairly and complying with the law.

A statement from Barratt said: “Barratt Developments notes the announcement made by the UK Competition and Markets Authority that it is opening an enforcement case as part of its ongoing investigation in relation to the sale of leasehold homes. The Group is committed to putting its customers first and will continue to cooperate with the CMA whilst it completes its investigation.”

Close