Amidst ongoing disquiet regarding leasehold properties affected by the Building Safety Act 2022 (BSA), conveyancers have been told that lenders are not expecting them to “take out a tape measure” in confirming the height of a building.
Nationwide’s Part 2 to the UK Finance Mortgage Lenders’ Handbook question 5.14.17 still states that conveyancers “must check that, to the best of [their] knowledge, the Leaseholder Certificate and any Landlord Certificate have been appropriately and accurately executed and populated”.
This, along with similar requirements from other lenders – many of which have since been relaxed – led to conveyancers feeling they were being asked to verify the information given in the Landlord Certificate.
Indeed, a Today’s Conveyancer survey in April found over half were not acting on any properties affected by the BSA, with a further 15% only acting in transactions with certain lenders.
A quick show of hands of those conveyancers in the room at the recent Bold Legal Group Conference in London suggested this has since escalated, with two in three attendees not acting on properties affected by the BSA.
‘We’re not going to ask conveyancers to take out a tape measure’
Rob Stevens, Head of Property Risk at Nationwide, was questioned on the subject at the conference by panel chair Chris Harris, co-founder of Collaborative Conveyancing. “Can conveyancers be confident they won’t be challenged as to the info they provide re the BSA?”, asked Harris. Dialling in via Zoom from Mexico at 3:30am local time, Stevens responded:
“We’re not going to ask conveyancers to take out a tape measure. If it’s not relevant for you to be doing it, we won’t ask you to do it.”
In an effort to further clarify conveyancers’ responsibilities, Stevens asked those in the room: “Have you actually read the Act?”. He continued:
“People who haven’t read it don’t necessary understand it. It’s not something you can just dabble with. You need to be au fait. You need to understand what Landlord and Leasehold Certificates are so you can advise on them. The danger is people are acting when they haven’t read the legislation.”
“Our stance is that we just want to ensure we lend on buildings that have been tested and are safe and ultimately consumers need to know the implications when it comes to liability,” he added. Asked whether Nationwide are slightly different from other lenders, Stevens responded:
“The more info we can collate upfront, the easier it makes the transaction at the backend and the less chance we have of people finding things out that become dealbreakers at the end of the day…
… We will only ask a lawyer to collate information if there are safety concerns and we need to press the issue in order to lend.”
Stevens added that proposed changes to Part 1 of the UK Finance Lenders’ Handbook are close to being agreed and are in his view “imminent”. “Nobody intended the part 1 to effectively cover all leasehold properties. It’s only for relevant buildings,” he concluded.
The insurers’ view
On the insurers’ side, Edward Donne, Howden Insurance Brokers Ltd, encouraged conveyancers to be clear about the work they’re undertaking and to limit their retainer:
“Broadly, you’re looking at a 10% extra premium for doing this work, so I hope you take the lead and charge appropriately for doing this work. The simplest thing is to follow the protocol set out by the SLC. It is logical and underwriters understand it. Say ‘yes, we’re going to follow the protocols’.”
Asked whether he would act if he was a conveyancer, Donne added:
“If I was a well-run business, then yes. But if I didn’t know what I was doing I would educate myself.”
Government plans under the spotlight
Also questioned on the Act’s implications was Kirstin Blagden of the Department for Levelling Up, Housing and Communities. Asked by a conveyancer in the audience whether the government plans to make it simpler for people to understand the height of a building, Blagden said:
“I find this very odd if I’m honest. A person who owns a building should know the height of that building. It’s not a conveyancer’s job. They should accept what their building owner tells them.”
On the other issued conveyancers are facing regarding the Act, Blagden said:
“We talk to a lot of people, including UK Finance. On their handbook, we had a meeting this week where conveyancing representative bodies made clear what needs to change, and UK Finance are considering this with lenders.
There are concerns with how you’d apply this with probate scenarios and leasehold extensions. The DLUHC recognises these and will fix these in due course, but it needs primary legislation, which won’t be too quick.”
There was, however, less clarity in other areas. Asked whether there is an intention for a digital register for landlord certificates, Blagden said it is something the government is “looking at as soon as practically possible”. Asked whether lease extensions will be retrospective, Blagden said:
“That’s what’s being considered at the minute. Government lawyers and counsel are working out what it would mean and how it would work then ministers will make a decision.”
On why the date of 14th February was chosen for qualifying leases, Blagden said: “I don’t know, is the honest answer.”
“When Kirstin Blagden […] said she would kindly join the Building Safety Act panel, I knew we would be giving the delegates what they wanted,” said Rob Hailstone, CEO, Bold Legal Group, organisers of the conference. He added:
“Whilst Kirstin could not answer all of the questions asked, she did clarify some important issues and made it clear that the difficulties conveyancers are facing are not going unnoticed.”
On the overall success of the event, Hailstone said:
“I thought the first BLG conference in 2022 was as good as it can get, but we have received even more positive feedback about [this year’s conference]. Lynne and I are completely blown away by the numerous kind comments we have received already.”
4 Responses
The article is ambiguous about whether Nationwide will be changing its BSA Part 2s (it mentions Nationwide’s Part 1 ).
So how exactly does Rob Stevens expect conveyancers to satisfy themselves as to the height of a building? And was he implying that he is the only person who has read the BSA? But at least Stevens has clarified that he does not seem to be as concerned with the numbers of Conveyancers willing to act for Nationwide (see my poll a few weeks ago), as them being “au fait” with the Act which is his prerogative.
And it does not instil any confidence when the DLUHC representative “could not answer all of the questions asked”.
I believe that when UK Finance change the Part 1s, Nationwide will issue more guidance on their part 2s.
Chris Harris who chaired the discussion has clarified that there were issues that were beyond the remit of the DLUHC representative, Kirstin Blagden. So I must clarify that my comments above are NOT intended as criticism of Ms Blagden.
But I am critical of DLUHC (the Department) which only bothered to respond to my very detailed submissions about the BSA once a House of Lord Committee got involved. And those submissions took many frustrating hours of my own personal time to prepare.
I also believe that Rob Stevens from Nationwide was very clear at the event about conveyancer obligations, but of course you had to have been there.