Several major housebuilders could be in the dock with the UK competition watchdog after it found evidence of “serious issues” in the selling of leaseholds, including potential mis-selling and unreasonable fees.

The Competition & Markets Authority said its investigation into the housing industry had found leasehold homeowners were being unfairly treated and prospective buyers misled by housing developers.

While the probe was at an “early stage” and the CMA has not reached a view whether or not any person or company has broken consumer protection law, it did say it was completing “the necessary legal work to launch direct enforcement action against companies it believes have broken consumer protection law”.

No companies were mentioned in the report apart from Persimmon PLC (LON:PSN), though only as part of research by the CMA into Cardiff city council’s recent litigation case against the FTSE 100 company.

Andrea Coscelli, the CMA’s chief executive, said: “We have found worrying evidence that people who buy leasehold properties are being misled and taken advantage of.”

He added: “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.”

Abuses found by the CMA included some homeowners having to pay escalating ground rents, which in some cases were on course to double every 10 years.

Some housing developers were found to have misled customers about the difference between leasehold and freehold, some saying there was no difference, another saying a house was a “virtual freehold” and others given “unrealistically low estimates of the freehold purchase price” at a future date.

Companies with previous

Persimmon is one housebuilder that has received many complaints about what were felt to be punitive leasehold charges in the past, with the recent results of the company showing a fall in sales as it tries to mend its ways.

Both Taylor Wimpey PLC (LON:TW.) and Countryside Properties PLC (LON:CSP) have been cited in the past for selling 10-year doubling ground rents.

Last year Liverpool council criticised Countryside and said it will not sell the company any more land because of a “leasehold scandal”.

Three years ago, Taylor Wimpey set aside £130mln to convert customers who had been sold onerous leasehold contracts, while the company still had a problem two years ago when some customers were refused mortgages over the builder’s complicated lease structure.

Bovis, now Vistry Group (LON:VTY), has been advertising all its houses are freehold for a few years, while MJ Gleeson (LON:GLE) has always done so.

Between 1995 to 2009, only 5% of new build transactions were leasehold houses, before doubling between 2015-2017 and then collapsing after 2018.

After the growing ground rents scandal, in 2016 the government pledged to end leasehold houses and set new ground rents to as low as zero. 

The CMA report indicated not much had changed, with the body calling for a ban on the sale of new leasehold houses and for ground rents on new leases to be slashed to zero.