Barratt Developments, Countryside Properties, Persimmon Homes and Taylor Wimpey are believed to have broken consumer protection law in relation to leasehold homes.
The CMA uncovered what it described as “troubling evidence” of potentially unfair terms concerning ground rents in leasehold contracts and potential mis-selling. Buyers may have been unfairly treated and misled by developers, it said.
The developers stand accused of various sharp practices, including being deliberately vague about ground rent, failing to explain what it is or that it is likely to rise, and of misleading customers on the cost of converting their leasehold to freehold ownership. The CMA found evidence that some home buyers were told that the freehold would cost only a small sum, but later down the line the price had increased by thousands of pounds with little or no warning.
Other dirty tricks used by the big house-builders include giving buyers ‘unnecessarily short’ deadlines to complete purchases and unfair contract terms on ground rents – in some cases doubling every 10 years.
The CMA will also be investigating firms that bought freeholds from these developers and have continued to use the same unfair leasehold contract terms.
The CMA has written to Barratt, Countryside, Persimmon, and Taylor Wimpey outlining its concerns and requiring information.
CMA chief executive Andrea Coscelli said: "It is unacceptable for housing developers to mislead or take advantage of homebuyers. That's why we've launched today's enforcement action.
"Everyone involved in selling leasehold homes should take note: if our investigation demonstrates that there has been mis-selling or unfair contract terms, these will not be tolerated."
Alongside its enforcement action, the CMA is also sending letters to a number of other developers, encouraging them to review their practices to make sure they are treating consumers fairly and complying with the law.
In response, Barratt Developments said that it was “committed to putting its customers first” and would cooperate with the CMA investigation.
Taylor Wimpey said: "The board takes this very seriously and Taylor Wimpey will continue to fully cooperate with the CMA."
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