The Conveyancing Association (CA) has today confirmed it will continue unabated with its campaign to reform and amend the leasehold transaction process, despite recent developments.
In August, the CA announced a number of recommendations it wished to see applied in order to cut back on what it sees as significant delays and overcharging taking place in the leasehold process.
However, also last month, Baroness Hayter raised a written question in the House of Lords regarding these issues in the leasehold process and the response from the Department of Communities and Local Government (DCLG) suggested that the Government department do not think there’s a problem.
Beth Rudolf, Director of Delivery at the CA, said: “Lord Bourne’s response to the question as to whether the Government plan to require landlords of leasehold properties to belong to a redress scheme indicated the lack of appreciation by the DCLG as to the loophole within the Commonhold and Leasehold Reform Act 2002.”
The response from Lord Bourne said that the Government is not persuaded more burdensome approaches to regulate landlords would be effective. Leaseholders in dispute with their landlord can apply to the First Tier Tribunal (Property Chamber) in England and the Leasehold Valuation Tribunal in Wales to seek redress.
However, the First Tier Tribunal is only granted jurisdiction in the Commonhold and Leasehold Reform Act 2002 over administration fees in respect of approvals or consents and therefore there is no form of redress for items such as Notice of Assignment, Deed of Covenants (unrelated to an application for consent), Certificate of Compliance or Transfer of Shares.
This has resulted in up to 75% of leasehold home movers being charged unreasonable fees, according to a recent survey by the CA.
Rudolf added: “Recent cases in the Upper Tribunal which sets precedent confirms that the Commonhold & Leasehold Reform Act wording is very restrictive, as confirmed by the Judge in Proxima –v- McGhee (2014) and Mehson Property Company Ltd –v- Pelligrino (2009) where neither the administration charges for a Deed of Variation nor the registration of an underlease with the Landlord could be considered within the Act’s definition.
“Similarly, there are no provisions for redress in respect of delay in the Leasehold sales process. Over 30% of home movers according to our data have to wait over 30 days to obtain the information they need to sell their home and that is after they have paid the Lease Administrator’s, often exorbitant, fees. It’s no wonder Leasehold transactions take on average four weeks longer to exchange and that has a big impact on the economy with 260,000 leasehold transactions annually.”
Paula Higgins, CEO of the Home Owners Alliance, added: “We see first-hand the difficulties of leasehold conveyancing from the consumer’s perspective. Buying and selling your home is very stressful for consumers and this stress is magnified when it is a leasehold property. Perspective buyers and sellers are held to ransom by some freeholders and their managing agents having to pay extortionate fees in order not to lose the sale. Even in the limited situation where they can dispute the Leasehold Property Enquiry fee, this is not an option as they need the goodwill and co-operation of the freeholder to sell their property and get on with their lives.”
John Outram, Conveyancing Partner at Taylor and Emmet, commented: “We see both sides of the coin as our firm acts for lease administrators and home movers. The problems with respect to charging arise at precisely the point where sellers and buyers (and their legal advisers) are under significant time pressure. That is not the context in which to be considering the niceties of a reference to a Tribunal. What is required are clear, prescribed, transparent, exact and most importantly, fair charges. The current situation is wholly unfair to those being forced to pay unacceptable fees to live in a leasehold property.”
The Conveyancing Association stressed it will continue to work with industry stakeholders across the leasehold and legal sector to create a fit for purpose redress scheme but this can only apply to Managing Agents who are required to be part of a redress scheme.
Rudolf said: “At the very least we want to see a level playing field with Landlords and Management Companies having the same obligations as Managing Agents but this will need the Government to understand the issue. We have been told there is no policy officer in the DCLG in relation to Leasehold anymore and they simply do not have the understanding of the legislative gaps and the impact on the home moving process. The 63% of estate agents who considered the process to be an issue and branded the Leasehold Sales Process ‘an absolute nightmare’ in response to our survey cannot be wrong, and this situation needs to be changed.”