Britain’s competition watchdog has closed its investigation into the alleged mis-selling of leases by Barratt Homes, which was part of a wider probe into homebuilders’ unfair terms and rising fees.
The Competition and Markets Authority has scrutinized the way leases have been sold, with many buyers saying onerous conditions on land rents have prevented them from selling or mortgaging their homes.
The watchdog opened charges against four developers – Countryside Properties, Taylor Wimpey, Barratt and Persimmon – in 2020. All but Barratt had settled, with the developer saying he had never sold leasehold properties with land rents doubled.
The CMA said on Tuesday there was insufficient evidence “to support a clear legal case to secure a class action remedy for Barratt’s leaseholders under its consumer law powers.” .
He said Barratt is no longer selling homes on lease and pursuing the case would not be a good use of his resources.
In a statement, Barratt said he had worked constructively with the AMC throughout the investigation and was “committed to putting his customers first.”
Following the crackdown, in December last year homebuilder Taylor Wimpey agreed to scrap ground rents that double every 10 years and move tenants who switched to inflation-linked deals to a fixed charge that would not increase over time.
On Tuesday, the watchdog said it was “positively engaging” with companies that have purchased freeholds from Taylor Wimpey to encourage them to remove doubling clauses from their leases.
Sebastian O’Kelly, director of campaign group Leasehold Knowledge Partnership, said while Barratt was a lesser offender compared to other homebuilders, he was disappointed to learn the AMC had closed its investigation.
“PLC homebuilders set out to sell homes that would become unsaleable in a few years because ground rates were so aggressive,” he said. “A more egregious example of consumers being duped does not exist.”
Tenants have been pushing for years to improve the terms of their leases. The mis-selling of leases has become known as “PPI of the housing construction industry” in reference to the mis-selling of payment protection insurance by banks.
Around 4.6million, or a fifth of all UK households, are tenants, meaning landlords are buying the right to occupy them for a set period of time.
A new tenancy reform law aimed at creating a fairer housing system came into force in June this year.