In 2014 the Conveyancing Association launched its campaign to improve the buying process for people purchasing leasehold properties. As experts in the in the property field, we are aware that property transactions are taking longer and longer. It is our strong belief that speeding up the conveyancing process would lead to quicker transactions, reduce the costs of property transactions and help to stimulate the market.
An area of particular concern for Conveyancing Association members is leasehold properties, especially properties which are within a flat complex, as approximately 200,000, or one in every five, properties sold in the UK per year are and that number is growing. There has also been a noticable rise in Leasehold Houses in the last few years.
In these cases, conveyancers must contact the landlord, managing agent, management company or residents’ association (who we collectively describe as the Lease Administrator) in order to obtain the information they require. Our research shows that whilst the average time it takes to obtain the necessary information is three weeks, with some cases it can take over eight, and it costs buyers an average of £350, with some costs exceeding £800.
It is no surprise then that overall leasehold transactions take between 14 and 20 days longer than freehold. The impact of these delays both directly and indirectly if you are in a chain with a leasehold transaction, is huge.
The issues grow when you consider that there is no obligation on a Lease Administrator to even provide this information and no redress scheme available to dispute the excessive fees or hold the Lease Administrator to producing the information within a reasonable time.
Add into this the services which the incoming leaseholder has to pay the Lease Administrator for such as notice of assignment and charge, deed of covenant, certificate of compliance and stock transfer form which have no statutory requirement to be provided for a reasonable cost or within a reasonable time and you start to see the scale of the issue.
Based on an assumed hourly rate of £100, our research across a dataset of 8,000 leasehold transactions indicate that up to 88% of charges would be unreasonable.
We have come a long way since the launch of the campaign but there is still a lot to be done. The Conveyancing Association have continued our work in this area by consulting with fellow industry leaders on potential solutions to these ongoing issues.
Thanks to the work of the All Party Parliamentary Group for Leasehold Reform, the issue of leasehold was debated in the House of Commons on 22nd December 2016 and the Minister confirmed that there will be a review of Leasehold generally.
The CA has also petitioned the law Commission to review Leasehold within their 13th Programme of Law Reform and HM Land Registry to remove Leasehold Restrictions. These restrictions protect a contractual provision and not a legal interest in land and result in a disproportionately large number of requisitions and delay in registration due to the lack of obligation on the Lease Administrator to provide the certificate of compliance which is required to comply with the restriction in a reasonable period of time or at reasonable cost.
We launched our Leaseholder Guide to Administration Fees [here] in March 2017 to provide buyers, owners and sellers of leasehold property with an easily digestible guide to leasehold fees and what to do if the fees charged are excessive.
We continue to work with the Ombudsmen, leasehold and legal sector to deliver an industry led solution in the meantime.
Please contact us to get involved.