When it comes to critical issues within the housing market, one at the top of the list must be the issues within the leasehold sector at present. Those surrounding the sale of certain new-build leasehold homes, and the impact on purchasers of such properties, are seen as a high political priority, and potential solutions have to be found for difficulties such as doubling ground rents and the consequent problems over remortgage and future sales.
Of course, progress has been made: it is apparent that, even ahead of an intended Government ban, the number of new-build houses sold on a leasehold basis has fallen sharply. But that does not mean that all political pressure is now off the issue as the position of those who already have purchased properties under apparently onerous terms remains in the spotlight.
All parts of the sector – from builders to lenders to surveyors to conveyancers – are being urged to come up with solutions for those affected. Politicians are on the case as is the Secretary of State for Housing so this is not an issue which will go away if everyone keeps their heads down.
This will be reassuring for those individuals who are in such a predicament and I think they can also feel that there is a general openness from all parts of the sector to do something practical and helpful. Many builders have already put in place their own schemes to address the worries of their customers. Others are working up their next steps. No-one seems to be parking the question in the ‘too difficult’ tray. I am sure that conveyancers will be equally keen to see a fair resolution for existing leaseholders, and to work on any variations to leases which need to be made to allow solutions to be put in place.
This is all to do with the immediate: there are more strategic problems with leasehold which are being addressed in the longer term by the Law Commission and on which the CA has been making its voice heard.
You’ll already know the CA has been pushing Commonhold as a potential alternative, and this will be a focus of continuing discussions with the Commission. But there is not going to be change any time soon and the short-term problems have to be tackled in the short term.
So what is our role in the short term. Conveyancers would have, what I might describe as, a ‘walk-on part’ in delivering these – the main action will lie elsewhere. But I suggest there is an obligation on conveyancing firms to flag problematic leasehold terms, and highlight them early in the process. We should of course be part of any cross-industry collaboration in this area, and given we have a strong track record for outlining tangible and positive solutions to such problems, I am sure we will be asked in to help some of the other parties with the construction of their solutions.
It is good to note there have been relatively few complaints about conveyancers on this topic so we need not be defensive in offering to help others. Leaseholders also need to know when they are being offered new arrangements and may even need encouragement to take them up. Some builders/developers/insurance companies are offering variations to leases or leasehold switch arrangements. We may have a role in flagging up what this entails as it appears not all affected appreciate what is being offered. The call to action sometimes falls on deaf ears and conveyancers may be able to encourage take-up and better targeting of important messages.
On the flip side we also need to be aware of over-reaction. Some lenders have recently updated their UK Finance Handbook responses to require variation of leases where rent during the term of the mortgage will exceed the Housing Act limit of £250 (£1,000 in London). This appears to be a sledge hammer to crack a nut when HM Land Registry have confirmed there have only been four applications resulting from possession orders under the Act in 2018 and the Ministry has already committed to updating the legislation to exempt long leases.
Overall, while this might seem like a long time coming for leaseholders, the good news is that movement is being made, political will to secure such changes is strong, and I’m sure they will not rest until changes are introduced and no leaseholder is ‘left behind’. As the CA and firms we should be doing all we can to support this.
Paul Smee is Non-Executive Chair of the Conveyancing Association (CA)