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Sept. 4, 2020, 9:36 a.m. EDT

London builders under pressure as regulators open inquiry into leasehold market

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By Barbara Kollmeyer, MarketWatch


Getty Images
Signage on new houses built by Barratt Homes on a residential housing estate in Paulton on September 12, 2012 in Somerset, England.

London stocks were headed for a third straight losing week on Friday, with strong gains for mining companies but losses for building companies amid news regulators will open an investigation into the treatment of leasehold homeowners.

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.80%  rose 0.6% to 5,882.19. The index dropped 1.5% on Thursday and is looking at a drop of 1.4% for the week, adding to a string of weekly losses. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1123%  fell 0.4% to $1.3224, a loss of around 1% for the week.

The home-building sector produced the biggest decliners, with shares of Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV -2.51%  down 4.5%, while Persimmon /zigman2/quotes/206444744/delayed UK:PSN -0.88% , Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW -1.88%  all saw losses of around 2%.

The U.K. Competition and Markets Authority (CMA) announced enforcement cases against Barratt, Countryside Properties, Persimmon Homes and Taylor Wimpey, saying its action relates to developers mis-selling ground rents, and misleading people about the availability of freehold homes and the cost of converting a leasehold to a freehold. It is also probing unfair sales tactics.

“The impact could be widespread with major developers Barratt Developments, Persimmon, Countryside Properties and Taylor Wimpey all potentially in the firing line,” said Russ Mould, investment director at AJ Bell, in a note to clients. “The last thing the sector needs heading into a recession is to face a mis-selling scandal akin to the PPI [payment protection insurance] debacle which hit the banks in the wake of the financial crisis.”

Mining companies drove the gains on Friday, with banks also higher after merger talk in the Spanish bank sector inspired gains across the industry. Shares of Rio Tinto /zigman2/quotes/202627887/composite RIO -2.99%   /zigman2/quotes/208934945/delayed UK:RIO -2.88%  rose 2.4%, BHP Group /zigman2/quotes/203323256/delayed UK:BHP -1.53%  rose 1.8% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL -0.41%  gained 3.5%.

Oil companies also rose, helping to lift the main index, with Royal Dutch Shell /zigman2/quotes/205095589/composite RDS.A -1.81%   /zigman2/quotes/207682964/composite RDS.B -1.40%  up 1.7% and BP /zigman2/quotes/202286639/delayed UK:BP -2.75%   /zigman2/quotes/207305210/composite BP -1.56%  up 1.8%.

“The impact could be widespread with major developers Barratt Developments, Persimmon, Countryside Properties and Taylor Wimpey all potentially in the firing line,” said Russ Mould, investment director at AJ Bell, in a note to clients.

“The last thing the sector needs heading into a recession is to face a mis-selling scandal akin to the PPI debacle which hit the banks in the wake of the financial crisis.”

/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,381.03
-51.14 -0.80%
Volume: 695,548
Nov. 25, 2020 3:44p
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/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.3378
+0.0015 +0.1123%
Volume: 0.0000
Nov. 25, 2020 10:59a
loading...
/zigman2/quotes/209812640/delayed
UK : U.K.: London
628.60 p
-16.20 -2.51%
Volume: 1.91M
Nov. 25, 2020 3:44p
P/E Ratio
16.17
Dividend Yield
0.00%
Market Cap
£6.54 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/206444744/delayed
UK : U.K.: London
2,831.00 p
-25.00 -0.88%
Volume: 544,782
Nov. 25, 2020 3:44p
P/E Ratio
13.37
Dividend Yield
3.89%
Market Cap
£9.10 billion
Rev. per Employee
£690,520
loading...
/zigman2/quotes/208623755/delayed
UK : U.K.: London
161.50 p
-3.10 -1.88%
Volume: 9.00M
Nov. 25, 2020 3:44p
P/E Ratio
13.21
Dividend Yield
0.00%
Market Cap
£5.98 billion
Rev. per Employee
£709,131
loading...
/zigman2/quotes/202627887/composite
US : U.S.: NYSE
$ 65.63
-2.03 -2.99%
Volume: 1.04M
Nov. 25, 2020 10:59a
P/E Ratio
14.88
Dividend Yield
5.87%
Market Cap
$112.13 billion
Rev. per Employee
$852,406
loading...
/zigman2/quotes/208934945/delayed
UK : U.K.: London
4,907.50 p
-145.50 -2.88%
Volume: 1.68M
Nov. 25, 2020 3:44p
P/E Ratio
14.02
Dividend Yield
6.06%
Market Cap
£83.95 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203323256/delayed
UK : U.K.: London
1,753.60 p
-27.20 -1.53%
Volume: 2.58M
Nov. 25, 2020 3:44p
P/E Ratio
14.07
Dividend Yield
5.23%
Market Cap
£99.63 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201381512/delayed
UK : U.K.: London
2,302.00 p
-9.50 -0.41%
Volume: 1.98M
Nov. 25, 2020 3:43p
P/E Ratio
17.23
Dividend Yield
2.44%
Market Cap
£28.53 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205095589/composite
US : U.S.: NYSE
$ 36.44
-0.67 -1.81%
Volume: 2.15M
Nov. 25, 2020 10:59a
P/E Ratio
N/A
Dividend Yield
4.47%
Market Cap
$140.45 billion
Rev. per Employee
$4.11M
loading...
/zigman2/quotes/207682964/composite
US : U.S.: NYSE
$ 34.94
-0.49 -1.40%
Volume: 2.46M
Nov. 25, 2020 10:59a
P/E Ratio
N/A
Dividend Yield
5.48%
Market Cap
$140.45 billion
Rev. per Employee
$4.11M
loading...
/zigman2/quotes/202286639/delayed
UK : U.K.: London
267.25 p
-7.55 -2.75%
Volume: 43.27M
Nov. 25, 2020 3:44p
P/E Ratio
N/A
Dividend Yield
5.89%
Market Cap
£55.25 billion
Rev. per Employee
£3.11M
loading...
/zigman2/quotes/207305210/composite
US : U.S.: NYSE
$ 21.52
-0.34 -1.56%
Volume: 6.46M
Nov. 25, 2020 10:59a
P/E Ratio
N/A
Dividend Yield
8.73%
Market Cap
$73.80 billion
Rev. per Employee
$3.99M
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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