England: CMA sets sights on law firms in leasehold scandal

England: CMA sets sights on law firms in leasehold scandal

Solicitors could be banned from “cosy” deals with housebuilders after conveyancing firms failed to prevent tens of thousands of people from buying new-build homes with “unfair” leases, The Times reports.

The Competition and Markets Authority (CMA) expressed concern over the role of law firms in sales that have left leasehold buyers encumbered with properties they are unable to sell and ground rents that double every ten to 20 years.

Developers like Taylor Wimpey sold homes with these leases and recommended that buyers use particular solicitors to complete the transfer.

But buyers have said these lawyers failed to explain how much they would have to pay or simply gave them the wrong information about leases.

The CMA said in an interim report on the scandal: “The solicitor’s duty is to act in the best interests of their client, with independence, honesty and integrity. There is a risk that this may be compromised if solicitors are concerned to avoid losing the recommendation that comes from the developer.

“This is a matter of concern and goes together with concerns about the effect of some inducements offered to purchasers to move to speedy exchange of contracts.”

Sebastian O’Kelly, chief executive of the Leasehold Knowledge Partnership, said: “In the leasehold scandal solicitors have been nothing more than the stooges of developers. Any solicitor on a developer’s panel who starts quibbling about aggressive lease terms will soon find himself turfed off it and there will be no more business.”

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