NAEA Propertymark welcomes leasehold investigation

NAEA Propertymark has voiced its backing of the Competition and Markets Authority (CMA) investigation into the mis-selling of leasehold properties.

Mark Hayward, Chief Executive of NAEA Propertymark says:

“We welcome the investigation by the CMA into the mis-selling of leasehold properties, as for too long housebuilders and developers have not been transparent enough about what it actually means to buy a leasehold property.

“Buying a property is a huge undertaking and it should be an exciting time, but for thousands of homeowners, it’s led to financial difficulty as they’ve become trapped in confusing contracts with freeholders.”

The NAEA Propertymark Leasehold: A Life Sentence? report revealed three in five (62 per cent) of leasehold property owners felt they were mis-sold and a further 93 per cent wouldn’t buy another leasehold property.

The CMA revealed its decision to examine whether leasehold contract terms are unfair and set out the position in a letter to Clive Betts MP, chair of the Housing, Communities and Local Government Committee.

Clive Betts replied to the CMA to say:

“The Housing, Communities and Local Government Committee report into leasehold laid bare a system in urgent need of reform, where homebuyers are vulnerable to exploitation by freeholders, developers and managing agents.

“Worse still, we heard extensive evidence from leaseholders regarding onerous ground rent terms, high and opaque service charges and one-off bills, unfair and excessive permission charges, and unreasonable costs to enfranchise or extend leases.

“Over the course of the inquiry we heard evidence suggesting that there are a significant number of cases where homebuyers may have been deliberately mis-led about the terms they were signing up to. If the sale of leasehold house has taken place with the homebuyer under the impression that they were buying it freehold, or ‘equivalent to freehold’ as many were told, then action needs to be taken.

“Equally, if a homebuyer is told they will be able to buy the freehold in a couple of years, only to find out it has been sold on to another company, then this should be investigated.”

The CMA says it’s conscious that information gathering on the general problems in the leasehold sector has already taken place through the recent work through various bodies on Leasehold and Commonhold Reform and that proposals for market reform are already in progress at the Law Commission and in government.

The CMA has stated that the work that they will undergo under consumer protection law will be complementary to the reform work already under way.

What are NAEA Propertymark doing?

The ‘Leasehold: A Life Sentence?’ report breaks ground on the leasehold scandal and sets out our robust recommendations to tackle the growing problem of life sentence leaseholds.

NAEA Propertymark has worked closely with Leasehold Solutions, the National Leasehold Campaign and Leasehold Valuers, to raise awareness of the scandal and to bring the latest leasehold advice to agents and consumers alike.

You can read more about what Propertymark is doing, what we are calling for guidance and more on our Lobbying page.

Kindly shared by NAEA Propertymark