The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has today (11th September 2018) issued its response to the Housing, Communities & Local Government (HCLG) Select Committee’s Leasehold Reform Inquiry.
The HCLG launched its inquiry into the Government’s leasehold reform programme in July this year and it focuses in particular on how ‘existing leaseholders in both houses and flats facing onerous leasehold terms can be supported’.
The Committee has invited submissions to be made on three issues:
· The adequacy of the Government’s programme of work on residential leasehold reform, including (a) its application to existing leaseholders in both houses and flats and (b) whether further reforms should be introduced;
· What support and Government intervention can be provided to existing leaseholders, in both houses and flats, affected by onerous leasehold terms; and
· What are the implications of providing such support and Government intervention to these existing leaseholders.
The CA’s response contains details regarding ongoing problems with leasehold, including the growth in the number of titles sold as leasehold every year (now standing at in excess of 20%) and the fact they take, on average, 20 days longer than freehold properties to achieve exchange of contracts. It has also expressed concern at the down valuation of leasehold properties by valuers due to the perceived onerous terms of the lease and the difficulty for existing leaseholders to sell properties.
It also highlights the abusive practices of some Lease Administrators, particularly with regards to the inflated charges they insist on existing leaseholders/prospective purchasers meeting in order to secure documentation like Certificates of Compliance, Deed of Covenants, Notice of Assignment, Notice of Charge, and others.
The CA also wants the Government to follow through on its commitment to make sure Lease Administrators have to provide this information within a fixed period – its data shows that in 37% of cases it takes over 30 days to receive the information required for sale from the Lease Administrator from point of payment.
The trade body has also outlined its concern that developers, particularly when it comes to the marketing of leasehold properties, are not complying with the Consumer Protection from Unfair Trading Regulations (CPRs) which require them to provide material information that would affect a consumer’s decision-making process when deciding to purchase.
The CA suggests that information such as the service charge, ground rent, terms of lease, restrictions on use, alteration or occupancy and any intended increase in ground rent and service charges would be material to a consumer’s transactional decision, and should therefore be included in the upfront marketing information.
As part of its role within the Legal Sector Group, the CA has also detailed a range of leasehold reform proposals it would like to see introduced covering: administrative activities, timescales for them, enforcement, unfair lease terms, overhaul of tenure, buildings insurance and management regulation.
The CA has issued the response to all its member firms and is urging both them, and all other industry stakeholders, to file their own individual response to the Select Committee by the deadline date of 14th September.
Beth Rudolf, Director of Delivery at the Conveyancing Association, said: “When the MHCLG responded to its own Call for Evidence on the Home Buying and Selling Process it confirmed it would mandate lease administration fees and require Administrators to respond within reasonable timescales. We have yet to see any progress being made to introduce this, however firmly believe that it will deliver major benefits to those looking to sell or purchase a leasehold property, cutting down significantly on the time it takes to exchange contracts.
“For too long, Lease Administrators have been able to set their own level of (overly inflated) charges and keep stakeholders waiting weeks/months on end, before delivering the necessary documentation. Given such activity, or rather lack of it, it’s no wonder that the time period to get to exchange of contracts on a leasehold property is that much longer than on a freehold basis.
“Our submission to the Leasehold Reform Inquiry provides tangible solutions that we, and as part of the Legal Sector Group, believe can positively impact on the experience of those looking to buy, sell, or currently live in, leasehold properties.
“Alongside the curbing of charges made by Lease Administrators, and insisting they respond quickly, we believe there needs to be far better upfront provision of information to those considering purchasing a leasehold property – we want to see greater detail on lease terms, charges, and the like, to ensure that the individuals are far better informed about what they are signing up to.
“Progress on leasehold reform is being made but we would like to see the Government move far more quickly in this area because the longer we wait, the greater potential for leaseholder detriment there is.”