The Office of Fair Trading (OFT) has announced a full investigation into leasehold in England and Wales.
The announcement has been prompted by the campaigning of the Leasehold Knowledge Partnership (LKP) and its sister website Carlex, the Campaign Against Retirement Leasehold Exploitation.
The news will be welcomed by thousands of landlords who have to factor service charges and subletting fees into their rental calculations.
Sebastian O’Kelly, director of LKP, said: "At last, officialdom is waking up to the monetising abuses in leasehold, ranging from small-scale Rackmans to huge corporate players.
"The amounts of money involved are staggering, and vast sums of money have been borrowed against dubious leasehold revenue streams from taxpayer-owned banks.
"Abuses in leasehold cross class boundaries: every single prime riverside site in London has been affected, as well as retirement flats often worth no more than £50,000. LKP has been contacted by flat owners at The Knightsbridge (£3m each) and retirement flats in St Helens.
"While the OFT is at last doing something, the same cannot be said for the complacent property tribunals, which have tolerated freeholders' expensive lawyers playing the system, and the Department of Communities and Local Government, which until very recently was determined to ignore the evidence of widespread sharp practice.
“It is disappointing that the present leadership of the Leasehold Advisory Service has nothing to say. As a new generation of homebuyers lives in flats, rather than freehold houses, the issue will only get worse.”
As Sir Peter Bottomley made clear at a meeting of leaseholders in London on 12 November, the abuses and cheating endemic to leasehold can only take place with the assistance of professionals: lawyers, surveyors, accountants, auditors.
“I predict ruined reputations in this sector and criminal proceedings,” said Sir Peter. "What is going on in leasehold is nothing short of a scandal."
The Leasehold Knowledge Partnership has been exposing the appalling practices in leasehold, mounting investigations and examining closely the land tribunal rulings.
On four occasions it has faced libel threats, but has not altered or removed any article from the website.
Ideally, LKP/Carlex would like to see commonhold being introduced, where flat owners all own a fraction of the freehold. This applies in the rest of the world.
Or, developments could be built with a residents’ management company in the lease, meaning that the owners control the building.
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