In Focus Commercial Credit In response
Giving answers to the government’s enquiry into leasehold reform
Beth Rudolf Director of delivery, the Conveyancing Association
Last month, we issued our 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: l 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. lWhat support and government intervention can be provided to existing leaseholders, in both houses and flats, affected by onerous leasehold terms. lWhat are the implications of providing such support and government intervention to these existing leaseholders. Our 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 the inflated charges they insist on existing leaseholders or prospective purchasers meeting in order to secure documentation
October 2018
like Certificates of Compliance, Deed of Covenants, Notice of Assignment, Notice of Charge, and others. We also want the government to follow
through on its commitment to make sure lease administrators have to provide this information within a fixed period – our 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. We are concerned that developers,
particularly when it comes to the marketing of leasehold properties, are not complying with the Consumer Protection from Unfair
As part of our role within the Legal
Sector Group, we also detailed a range of leasehold reform proposals we would like to see introduced covering: administrative activities, timescales for them, enforcement, unfair lease terms, overhaul of tenure, buildings insurance and management regulation. 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
Given such activity, or rather lack of it, it is 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
Trading Regulations, which require them to provide material information that would affect a consumer’s decision-making process when deciding to purchase. We suggest 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.
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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 or months on end, before delivering the necessary documentation. Given such activity, or rather lack of it, it is 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. CCR
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