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CA responds to Labour consultation on leasehold

The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has today (26th September 2019) issued its response to the Labour Party’s consultation report entitled, ‘Ending the scandal: Labour’s new deal for leaseholders’.

Published in July this year, the report sets out the Labour Party’s plans for the sector and the measures it would introduce should it form the next Government.

Labour says its measures are aimed at improving the leasehold regime and include banning the sale of new leasehold houses and flats except in ‘special circumstances’ and providing leaseholders with the ability to buy the full, freehold ownership of their home for 1% of the property’s value.

It says this would cut the costs of such a purchase suggesting that an average freehold purchase cost on a 90-year lease would come down from £10k to £2.5k on a property valued at £250k.

The party is also promising to ‘revitalise commonhold’ saying it will make it the new tenure of choice and says it will hold a full public inquiry into the ‘leasehold scandal’.

In its response to the consultation paper, the CA sets out its support for the proposals for leaseholders to purchase their freehold, or to convert to commonhold at reasonable and set premiums, suggesting this will rid the system of ‘the current confusing valuation mechanisms [currently used] such as hope value, development value, marriage value, relatively and the graph of graphs’ which it says mean nothing to the general public and ‘have no place in providing security of ownership for someone’s hard-earned home’.

The CA has referred to Labour’s proposals as ‘robust’ and urges the party to work across Parliament to deliver a cross-party consensus.

Other proposals within Labour’s report include:

  • An end to ground rents for new lease homes, and a cap on ground rents for existing leaseholders at 0.1% of the property value, up to a maximum of £250 a year.
  • A crack down on unfair fees and contract terms.
  • The introduction of a right to challenge unfair fees or poor service.
  • The intention to give new rights to empower leaseholders to hire and fire their managing agent(s), or to take over the management of their homes themselves.

Labour is seeking views from leaseholders and, while the CA has issued its response, it is also urging its member firms to provide their own responses by the deadline date of 30th September 2019.

The full Labour Party consultation document can be viewed here.

Beth Rudolf, Director of Delivery at the Conveyancing Association, said:

“The Labour Party conference has just taken place in Brighton and there were plenty of proposals and measures about and around the housing market being discussed and voted upon. Earlier this year, the party published its views on the current leasehold regime, and how it might change it should it form the next Government.

“Today, the CA has responded to Labour’s ‘Ending the scandal…’ document and overall we are supportive of a robust set of proposals, especially as there appears to be agreement amongst various political parties on what should happen next. It’s our firm belief that leasehold reform is a cross-party issue and one which will not go away, so we are hoping a spirit of co-operation will extend into the next Parliament and beyond any potential General Election.

“Our work is referenced in this report and it’s great to see a large number of measures that we discussed and support making it into the paper, including the proposed capping of ground rent to £250 and the abolition of forfeiture, as both will prevent leaseholders from losing their homes to unscrupulous landlords.  The balance of the interests of all parties must be struck so we hope that whilst forfeiture will be abolished there will be a mechanism to ensure that uncontested service charges can be efficiently recovered from defaulting leaseholders so that the rest of those in their block are not penalised.

“We also hope that the reference to administration and permission fees in the report means we can ensure any fee paid to a lease administrator during the home moving process, or when a leaseholder wishes to change their property or the use of it, will be reasonable. The CA’s own research has shown that as many as 80% of leaseholders are overcharged for some administration expenses by lease administrators when they buy their property.

“Overall, our response to this report is supportive and we look forward to working with all political parties to ensure we have a much fairer system for existing leaseholders and that we reshape the system to ensure that the dubious practices of the past can never be repeated.”

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