Secretary of state for housing, communities and local government James Brokenshire has written to the Competition and Markets Authority and the Solicitors Regulation Authority in an effort to tackle issues with the leasehold market.
Official figures point to approximately 100,000 tenants trapped in “exploitative and unfair” leasehold arrangements, with home owners suffering a ‘Double Clause’ in the worst cases. This amounts to ground rent automatically doubling every ten years, which would see £300 ground rent rise to £4,800 after 40 years.
The government wants to see the CMA and the SRA tackle what it believes to be a mis-selling issue, asking the latter agency to “crack down” on solicitors involved in these cases.
It was only in early September that NAEA Propertymark opined that leasehold contracts may be the next big mis-selling scandal, pointing out that, according to its research, almost half of home buyers did not understand the full terms of their deals.
James Brokenshire says: “Unfair leasehold practices have no place in a modern housing market, neither do excessive ground rents which exploit consumers.
“I am very conscious of some of the bad practices that we have seen in the leasehold market, which is why I will be meeting with the industry later this week to underline the need for redress, and for solutions to be offered to people who frankly have been mis-sold in a number of cases.
“I have also written to the Competition Markets Authority and the Solicitors Regulation Authority knowing there are issues and questions that have seriously been made about some of the practices and to ensure we are taking action on a number of fronts.”
In late October, the ministry that Brokenshire heads released statistics that showed that 18 per cent of England’s total housing stock is made up of leasehold dwellings.