A letter to a Campaign Against Retirement Leasehold Exploitation reveals that the Office of Fair Trading, whose seemingly interminable investigation into exit fees on sale of leasehold retirement properties has lasted three years, will be making a “substantive announcement” in August.
The news comes in a letter of July 11 from Martin Harvey, of the “Retirement Homes Investigation Team”.
But there have also been heavy hints from Housing Minister Grant Shapps that he anticipates some action from the OFT.
In June he wrote to Justice Secretary Ken Clarke, who had raised the matter on behalf of a constituent: “The Department for Business, Innovation and Skills is responsible for the Office of Fair Trading and its investigations into ‘exit fees’. As Housing Minister, however, I have received numerous representations about this issue, and have a keen interest in the outcome which will soon, I hope, be reaching its conclusions. Depending on the outcome, I have not ruled out taking further steps to address this issue should it prove necessary.”
If the announcement in August actually is “substantive”, it will be a major advance on the OFT’s stance in February.
Then, Jason Freeman, the OFT’s Legal Director, Goods and Consumer Group, told LKP:
“… the likely outcome of our investigations are going to be one of the following: we conclude there is no problem, and close the case; we reach a voluntary settlement with the parties and publish the undertakings they give; or we issue court proceedings where we consider terms are unfair, and the parties are not willing to give satisfactory undertakings …
“In relation to the retirement homes investigation, the current state of play is that we are in negotiation with a number of parties about changes they should make to the way they enforce lease terms and what future leases should include. In general, the OFT tries to resolve matters through negotiation rather than litigation, but because of the practicalities of these discussions this can take some time. In this case I am hopeful that we will reach the relevant agreements in the next few months.”
The OFT suggested that a class action by cash-strapped pensioners to mount a class action over exit fees might be more effective.
The Hanover Housing Association, which manages 19,000 retirement properties, publicly criticised the OFT for its feebleness in May
“We wanted this tested in court, but the OFT didn’t want to do this,” said chief executive Bruce Moore. “This leaves an important area of the investigation unresolved.”
It is absurd that the OFT will have taken three years to say something “substantive”. If exit fees are declared unfair, a considerable number of flats would have been sold in that time and families would have suffered financial loss.
It must be strongly emphasised that this single issue is not the most important one facing residents in leasehold retirement flats, although it may be for their heirs.
Stealth charges, inter-company contracts and the Wild West mayhem of some managing agents’ accounting are far more serious.