The Competition and Markets Authority (CMA) has found ‘serious issues’ relating to unfair contract terms and potential mis-selling in the leasehold sector.
The CMA has raised concerns about several issues, including rising ground rents and excessive maintenance fees.
The main issues centred on individuals and businesses being misled about the cost of converting a leasehold to freehold, with many initially being told that this would only cost a small amount before the price increased by thousands of pounds without any prior warning.
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.
“We’ll be looking carefully at the problems we’ve found, which include escalating ground rents and misleading information, and will be taking our own enforcement action directly in the sector shortly.”
The CMA is currently completing the legal work to launch direct enforcement action against firms that it believes has broken consumer protection law, which could lead to the companies signing legal commitments to change how they conduct their business.
In many cases, businesses and individuals have not been told upfront that the property is leasehold, and what that entails. Some developers and property owners have also failed to explain the difference between leasehold and freehold properties.
For help and advice with the sale and purchase of freehold and leasehold commercial properties, contact our expert team today.