Competition watchdog closes leasehold investigation into Bharat Homes

Britain’s competition watchdog has closed an investigation into the mis-selling of leasehold properties by Bharat Homes, part of a wider investigation into unfair terms and inflated fees by housebuilders.

The Competition and Markets Authority has been scrutinizing the way leasehold properties are sold, and many buyers are finding it difficult to sell or rent their homes when they face tough leases.

The watchdog opened charges against four developers – Countryside Properties, Taylor Wimpey, Barratt and Persimmon – in 2020. All but Barratt agreed that the developer had never sold any leasehold holdings that doubled rents.

The CMA said on Tuesday that there was “insufficient evidence to support a clear legal case for a collective remedy for the Barat Leaseholders under its jurisdiction under the Consumer Law”.

Barratt said he would no longer be selling leaseholds and that continuing with the case would not be good for his fortune.

In a statement, Barratt said he had worked constructively with the CMA throughout the investigation and was “committed to putting his clients first”.

Following the move, in December last year housebuilder Taylor Wimpey agreed to scrap rents that double every 10 years and move inflation-linked agreements to fixed payments that do not increase over time.

On Tuesday, the regulator said it was “positively engaging” with companies that bought freeholds from Taylor Wimpey to encourage them to remove double clauses from their leases.

Sebastian O’Kelly, director of the campaign group Leasehold Knowledge Partnership, said he was disappointed to hear that the CMA had closed its investigation, despite Barrett’s low level of offending compared to other housebuilders.

“PLC home builders started selling houses that would not sell in a few years because land prices were so strong,” he said. “There is no clearer example of the axis of consumerism.”

Leaseholders have been scrambling to improve their leases for years. Mis-selling of leaseholds, known as “house building industry PPI”, is the mis-selling of payment protection insurance by banks.

An estimated 4.6m, or a fifth of all UK households, own a leasehold, meaning homeowners buy the right to buy them for a period of time.

A new tenancy reform law aimed at creating a fairer housing system came into force in June this year.

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