Legal threat over toxic leaseholds hits builders
THE threat of legal action is hanging over some of Britain’s biggest housebuilders after the competition regulator vowed to crack down on toxic leasehold homes.
A Competition and Markets Authority (CMA) investigation found evidence that many families were ‘misled’ by firms selling leasehold homes on new estates.
This meant that buyers were paying for the right to live in their property for a set period, instead of owning it outright.
Crucially, it is alleged many did not realise this was what they were signing up to. In as many as 100,000 cases the terms of leasehold contracts contained such high fees, including costly ground rents, that it was virtually impossible to sell on the homes.
The watchdog will order companies caught up in the scandal to compensate victims of any unfair business practices and sign legally binding agreements to change their policies.
Any which don’t will be threatened with court action. The CMA did not name any companies but a number of building groups that have been connected to the scandal were tracking lower.
These included Taylor Wimpey (down 1.5pc, or 3.1p, to 202.2p),
Persimmon (down 1.5pc, or 44p, to 2839p), Bellway (down 2.6pc, or 98p, to 3723p), and Barratt Developments (down 1.5pc, or 11.6p, to 757.2p). Their losses came as London’s two premier indexes once again closed in the red.
The FTSE 100 was down 3.2pc, or 215.79 points, to 6580.61 by the close – a fall of more than 11pc this week as fears spread about the impact coronavirus would have on the global economy.
This wiped almost £207bn off the value of Britain’s 100 biggest firms, including £54.2bn yesterday.
The FTSE 250, which is swayed more by events at home than abroad, fell 2.3pc, or 452.53 points, to 19330.92, as Bank of England governor Mark Carney said the virus could weigh on UK growth within the next few months.
Aston Martin Lagonda tumbled a further 5pc, or 17.8p, to 338p, to another record low, as the Geneva Motor Show was cancelled because of the virus. Aston, which put out dire annual results on Thursday, was due to relaunch its Vantage car at the event.
And oil companies were pummelled as Brent crude flirted with going below the psychologically important $50 a barrel mark.
The oil price was down more than 3pc at $50.50 shortly after UK markets closed. Royal Dutch
Shell fell 4pc, or 68.8p, to 1663.6p, BP was down 4.4pc, or 18p, at 396.15p, and Premier Oil dipped 8.4pc, or 7.14p, to 77.64p.
Amid the wider market turmoil, Premier Inn owner Whitbread failed to raise traders’ interest after it bought 19 hotels in Germany for an undisclosed sum.
The company, whose shares dropped 4.4pc, or 180p, to 3894p, is more exposed to the travel and tourism sector since it sold Costa Coffee to Coca-Cola for £3.9bn in 2018.
Elsewhere, struggling Yorkshire potash miner Sirius Minerals plunged 11.3pc, or 0.57p, to 4.44p as the deadline closed for investors to submit their proxy votes in a crunch ballot next week.
Shareholders are deciding whether to allow FTSE100-listed mining group Anglo American – down 3.2pc, or 59p, to 1791.8p – to buy it for 5.5p a share, valuing it at £405m. Its stock closed 20pc lower than Anglo’s offer. It comes after several key investors, including Jupiter Asset Management and hedge fund Odey Asset Management, have joined retail investors in agitating for a higher offer.
Defence group Meggitt fell 2.5pc, or 13.6p, to 542p, despite clinching a £57m contract with US group Bell Textron to supply components for helicopters.