Home Improvers in Leasehold Properties Face Serious Issues, Says CMA

Home Improvers in Leasehold Properties Face Serious Issues, Says CMA

There is worrying evidence of potential mis-selling and unfair contract terms in the leasing household sector, according to the Competition and Markets Authority (CMA), which could impact those trying to improve their homes.

The CMA is planning to launch enforcement action against companies deemed to have misled and taken advantage of people who buy leasehold properties.

Leaseholders in England and Wales do not own the land the property is built on, and rent the property from the freeholder. This makes carrying out home improvements such as buiilding an extension or knocking down internal walls more difficult as leaseholders are required to obtain prior permission from the freeholder.

As part of an investigation into the leasehold industry, the CMA reports that people are being charged excessive and disproportionate permission fees for home improvements. Contesting these charges can be costly and, as such, very few people decide to go through with it. 

Andrea Coscelli, chief executive of the CMA, said: “We have found worrying evidence that people who buy leasehold properties are being misled and taken advantage of.

“Buying a home is one of the most important and expensive investments you can make, and once you’re living there you want to feel secure and happy. But for thousands of leasehold homeowners, this is not the case.”

Concerning Findings for Home Improvers

The CMA also identified that homeowners have been misled about the price of converting their leasehold to freehold ownership. Some are initially told this would cost a small sum, only for it to be increased by up to thousands of pounds later in the process without sufficient warning.

Moreover, some buyers are reportedly not told upfront that a property is leasehold, and do not understand what this means. Developers fail to explain the fees the homeowners need to pay and when. Having signed signed a contract the leaseholders are therefore unable to pull out of the purchase, and can find themselves struggling to sell their home and trapped in the contract.

The findings are very concerning for those planning to renovate, extend or in other ways improve their leasehold home, but the CMA’s investigation could lead to legal action which impacts the leasehold sector. 

If the CMA finds that any companies have broken consumer law then it could lead to firms signing legal commitments to change how they operate. The CMA could also take firms to court to enforce their compliance with the law

The CMA says it is also developing advice for people who own, or plan to own leasehold properties, with tips on how to proceed with renovating a house and or adding an extension, as well as what they should do with permission fees they consider unreasonable. 

This post first appeared on https://www.homebuilding.co.uk

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