CMA drops alleged mis-selling investigation into Barratt Homes

An investigation launched by The Competition and Markets Authority (CMA) in September 2020 into potential breaches of consumer protection law in the leasehold housing market by Barratt Homes has been dropped on the grounds of insufficient evidence.

Just under two years ago the CMA launched enforcement action against Coalville-based Barratt, Countryside Properties, Persimmon Homes and Taylor Wimpey.

The move came after the body uncovered “troubling” evidence of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling.

The CMA was concerned that leasehold homeowners may have been unfairly treated and that buyers may have been misled by developers.

The CMA launched an investigation into ground rent increases based on the Retail Price Index (RPI) and proposed to take enforcement action should it find evidence of unfair practices in relation to these. In particular, the CMA said it was concerned about the fairness of escalating ground rent terms linked to RPI, and the possibility that these are not always effectively explained by developers when discussing RPI-based ground rent with prospective homeowners.

However, this morning (16 August), the CMA said in a statement that there was insufficient evidence to support a legal case against Barratt.

The statement reads: “Regarding its investigation into alleged mis-selling by Barratt Homes, the CMA has now closed its case. 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.”

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

Taylor Wimpey has committed to help remove such clauses at no cost to leaseholders.