Competition watchdog closes leasehold probe into Barratt Homes

The UK competition watchdog has closed its investigation into the alleged mis-selling of leaseholds by Barratt Homes, which was part of a broader inquiry into housebuilders’ unfair terms and rising fees.

The Competition and Markets Authority has been looking into the way that leaseholds were sold, with many buyers saying onerous terms on ground rents left them struggling to sell or mortgage their homes.

The watchdog opened cases against four developers — Countryside Properties, Taylor Wimpey, Barratt and Persimmon — in 2020. All but Barratt had settled, with the developer maintaining it had never sold any leasehold properties with doubling ground rents.

The CMA on Tuesday said there was insufficient evidence “to support a clear legal case to secure collective redress for Barratt leaseholders under its consumer law powers”.

It said Barratt no longer sold leasehold houses and that continuing with the case would not be a good use of its resources.

In a statement, Barratt said it had worked constructively with the CMA throughout the investigation and that it was “committed to putting its customers first”.

Following the crackdown, in December last year, housebuilder Taylor Wimpey agreed to abolish ground rents that double every 10 years and move leaseholders who switched to inflation-linked agreements to a fixed charge that would not increase over time.

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

Sebastian O’Kelly, director of the campaign group Leasehold Knowledge Partnership, said that while Barratt was a lesser offender compared with the other housebuilders, he was disappointed to hear the CMA had closed its investigation.

“PLC housebuilders set out to sell homes which would become unsellable in a few years because ground rates were so aggressive,” he said. “A more blatant example of consumers being shafted does not exist.”

Leaseholders have been lobbying for years to improve the terms of their leases. The mis-selling of leaseholds has become known as the “PPI of the housebuilding industry” in reference to the mis-selling of payment protection insurance by banks.

Approximately 4.6m, or a fifth of all UK households are leasehold, meaning that homeowners buy the right to occupy them for a fixed period of time.

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