The SRA’s recent Residential Conveyancing Thematic Review was damning reading for the handful of conveyancing firms that were failing to provide adequate information to their clients concerning the different types of property ownership and potential buyer implications.
According to the report, 23% of the firms that were targeted and formally observed did not explain the difference between freehold and leasehold titles.
Over a fifth of leasehold owners believe that they either do not remember or were not provided with information on the length of the lease and the myriad of additional charges like ground rent or service charges.
Many felt rushed in the final completion process with 26% of respondents not being provided with an advance draft copy of their leasehold contract before they were asked to sign on the day of completion.
Furthermore, 17% also believe that their chosen solicitor had failed to clearly explain the features of their leasehold agreement. Over a third of first-time buyers were also frustrated with the information provided by their conveyancer.
Simon Davis, Vice President of the Law Society of England & Wales, said:
“Buying a home is a significant long-term investment, so it’s essential buyers have all the right information and support at the right time to make an informed choice.
“This means all conveyancing costs should be presented upfront and at the earliest possible opportunity.
“It is important to remember developers and estate agents have a responsibility to share all relevant information with purchasers at the very beginning of the process – including on the differences between leasehold and freehold models of ownership.
“More must be done to ensure that consumers are made aware of this distinction, and the long-term contractual implications, before committing to a purchase.
“As highly regulated professionals, solicitors in conveyancing are required to adhere to the Solicitor Regulation Authority (SRA) transparency rules.
“We continually strive to drive improvements amongst the profession, which is why the infrastructure provided by our recently relaunched Conveyancing Quality Scheme (CQS) is so vital – helping us to drive up standards and to support continuous learning amongst solicitors.”
Leasehold Reform Campaigner Louie Burns, Managing Director of The Leasehold Group of Companies, said:
“This report highlights scandalous mis-selling of leasehold properties on an epic scale. Inadequate legal advice has left thousands of leaseholders subject to escalating charges and onerous ground rents which, in the long-term, may make extending their lease unaffordable or their property unsellable.
“Ultimately it is the responsibility of conveyancing solicitors to ensure prospective purchasers of leasehold properties are aware of the ownership structure, the lease terms and their long-term effect.
“Freeholders constantly use the argument of Caveat Emptor (‘buyer beware’) and accuse leaseholders of failing to properly understand the implications of owning a leasehold property. If conveyancing solicitors are negligent in their duty to provide accurate and comprehensive legal advice to their clients, then how on earth are leaseholders supposed to make an informed decision?
“A recent report by NAEA Propertymark found that 65% of leasehold house buyers used the solicitor their house builder recommended. We’ve seen numerous cases where the leaseholder has been forced to use a developer-recommended solicitor, who has failed to highlight onerous terms in the lease, such as doubling ground rents and unfair service charges.
“It looks very much like developers, freeholders and their solicitors are colluding to take advantage of leaseholders which is utterly unacceptable.
“We support the Select Committee’s call for the Competition and Markets Authority to investigate mis-selling in the leasehold sector and make recommendations for appropriate compensation.
“Conveyancing solicitors who are found to have given inadequate or misleading advice should be held accountable and leaseholders must be given adequate compensation.”
Do you feel that conveyancers have an increased duty in informing the buyer about the complexities that may arise in their property? Do the findings in this report paint an unjust light on the services most conveyancers provide?
4 responses
I was a second buyer of a shared ownership property and my conveyancer failed miserably to give me correct information. As far as I am aware, these leases apparently are assigned and the conveyancer did not have a copy so how could they properly advise on the contents? How can I get compensation for now having a flat that is completely unsellable? I know the difference between leasehold and freehold, have known for over 30 years but none of the clauses in this lease were relayed to me at any point. This conveyancer has ceased trading and it was more than 6 years ago when I bought so where does that leave people like me who knew absolutely nothing about the toxic clauses in these leases? Not only was I mis-sold by an estate agent but this was compounded by a conveyancer who only did very basic checks on searches, nothing on the lease.
Solicitors and conveyancers work on the approach of giving clients notice of the existence of leasehold provisions – not an understanding of them.
I worked for a firm that insisted that a file contained a letter confirming an appointment “to go through the lease” but that no written report on it was to be giving in case it showed a failure to address issues.
Serious consideration has to be given as to whether it is time to change to consstent reports on title by artificial intelligance with the organisational aspects of a move being dealt with by “transaction managers” who have expertise in supply change management with particular emphasis on gettng nformation to the rght place in the right form at the right time
Eighteen months ago I received solicitor’s a report on title which failed to state whether the property had a good and marketable title
Private practice resi. conveyancing is extremely poor in most cases, as I have said many times before, which is why I won’t do it any more.
Best advice. Dont buy any leasehold property!