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* CMA finds potential mis-selling, unfair contract terms
* Barratt, Persimmon, Taylor Wimpey shares underperform
* CMA also sending letters to other developers
* Housing minister to legislate against high ground rents
(Adds comment from Housing Secretary, updates share move)
By Yadarisa Shabong
Sept 4 (Reuters) - Britain's competition regulator on Friday
launched an investigation into four of the country's biggest
housebuilders in relation to possible mis-selling of leasehold
homes and high ground rents.
The Competition and Markets Authority (CMA) said it was
opening enforcement cases against Barratt Developments,
Persimmon Homes, Taylor Wimpey and Countryside
Properties.
The watchdog said it had uncovered evidence of potentially
unfair terms with regard to ground rents in leasehold contracts
and potential mis-selling which may have broken consumer
protection law.
"It is unacceptable for housing developers to mislead or
take advantage of homebuyers," Andrea Coscelli, CMA's chief
executive, said in a statement.
Shares of Britain's biggest housebuilder Barratt fell 1.4%
by 0930 GMT, Persimmon lost 1.3% and Taylor Wimpey inched down
0.3%, while Countryside was marginally higher.
The companies all said they were co-operating or engaging
with the watchdog, with Taylor Wimpey adding that it would
provide further information requested by the CMA in the coming
weeks.
"We will be introducing legislation to restrict ground rents
in new leases to zero and outlaw new leasehold houses," said
housing minister Robert Jenrick.
"We are also considering the important work of the Law
Commission on wider reforms to leasehold such as enfranchisement
rights and will be responding in due course," he said.
Persimmon said in an emailed statement it stopped selling
leasehold houses where it owns the freehold in 2017.
"We believe these are known historic issues where companies
have already taken corrective action. At this stage we see
immaterial risk to earnings or requirement for provision," said
analysts at Credit Suisse.
The CMA said the possible outcomes of its investigation
could include court action or legal commitments from companies
to change their practices.
It will also investigate certain firms that bought freehold
properties from these developers and was sending letters to a
number of other developers, encouraging them to review their
practices.
Homebuilders in the UK have been battered in recent years by
the country's decision to leave the European Union, while
coronavirus restrictions added to those woes.
However, recovery was gathering pace with mortgage lender
Nationwide saying this week house prices had leapt to hit an
all-time high in August.
Britain gave homebuyers an incentive amid the crisis by
cutting a tax for house purchases in July.
(Reporting by Yadarisa Shabong and Pushkala Aripaka in
Bengaluru; Editing by Amy Caren Daniel and Elaine Hardcastle)
