By Harry Scoffin
Six months on from rejecting calls to investigate controversial leasehold contracts, the Competition and Markets Authority has had a change of heart, launching on Thursday an inquiry into leasehold mis-selling. LKP appealed to the CMA to make this decision back in 2017.
The pro-consumer body is expected to look into whether certain lease clauses can be struck out for being ‘unfair terms’ as legally defined.
It has suggested its findings could lead to developers and freeholders having to pay out to affected leaseholders.
The competition watchdog has outlined plans to investigate the extent of any potential leasehold mis-selling and onerous terms. The Competition and Markets Authority (CMA) has committed to investigating whether home owners are being hit with expensive fees or unfair contract terms, as well as whether they are being given all the information they need before signing up.
The CMA’s policy reversal seems to have been prompted by a highly critical report into the leasehold sector by the Communities Select Committee earlier this year. It had urged the CMA to take action.
In a letter to the group’s Chair, Clive Betts MP, CMA head Andrea Coscelli stated that his organisation would leverage its consumer protection law powers, rather than pursue a full-scale ‘market study’.
Mr Coscelli justified this on the basis that the CMA would play a supporting role to other stakeholders already leading on leasehold reform, including the LKP-run All-Party Parliamentary Group (APPG) and the Law Commission.
LKP hopes that this is not the CMA getting in its excuses early for another underwhelming research paper.
Veteran campaigners will remember the CMA’s 2014 review of residential property management services which had firmly concluded “the market works well for many leaseholders”.
The report failed to recommend statutory regulation of managing agents. Its rather inconsequential proposals to give leaseholders the right to ‘re-tender’ and ‘veto’ a managing agent were quietly dropped by government at the time, which then went on to block reform of the Right to Manage (RTM) regime.
Fast forward some thousands of consultation responses later, and with the leasehold scandal rising up the policy and media agenda to become second to Brexit, the CMA’s decision to reassess leasehold tenure could not have come at a better time.
LKP welcomes this development and trusts that government will give the CMA the resources it needs to produce a really seminal piece of work.