Watchdog drops case against Barratt Homes in leasehold mis-selling scandal
The Competition and Markets Authority launched an investigation into the leasehold housing market more than two years ago.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.An investigation into alleged mis-selling by housebuilder Barratt Homes has been dropped by the competition watchdog after it found “insufficient” evidence to take legal action.
Four of the UK’s biggest housebuilders came under scrutiny from the Competition and Markets Authority (CMA) more than two years ago as it probed the leasehold housing market.
It followed allegations that large developers had broken consumer protection laws by mis-selling leasehold homes and using unfair contract terms which tied some leaseholders to homes they could not sell.
In December, housing giant Taylor Wimpey agreed to scrap terms from leasehold contracts which caused ground rents to double in price every decade.
And 15 more businesses committing to removing the unfair terms in March, effectively freeing thousands more leaseholders from spiralling ground rents which trapped them in unsellable homes, the CMA said.
But the watchdog reported on Tuesday that it has closed the case against Barratt Homes and will not be pursuing a legal case.
Barratt was a lesser offender in selling leasehold homes with such aggressive ground rents that they were subsequently unsellable
The CMA said: “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.
“Barratt’s sales practices have changed, and they no longer sell leasehold houses.”
It means that anyone who believes they have been mis-sold a leasehold home by Barratt will not be compensated as part of collective legal action. There is insufficient evidence that Barratt has mis-sold any homes for the CMA to pursue a clear legal case, it said.
But people can still seek individual action if they feel they are victims of mis-selling, the CMA added.
Sebastian O’Kelly, chief executive of the charity Leasehold Knowledge Partnership which campaigns to reform leaseholding rules, said housebuilders must be scrutinised.
“Barratt was a lesser offender in selling leasehold homes with such aggressive ground rents that they were subsequently unsellable,” he said.
“Nonetheless, housebuilders sold leasehold homes often to buyers subsidised by taxpayer loans with purposely designed investment assets squirrelled into them, and then sold these lucrative freeholds to private equity punters, often based offshore.
“This practice has eroded the moral authority of this sector, along with the post-Grenfell building safety scandal, and the public must never allow these subsidised homebuilders such un-scrutinised freedom again.”
Barratt said it is “pleased to note” the CMA has closed the investigation after working with the watchdog throughout.
An investigation into others in the leasehold market is still open.