The Conveyancing Association has today outlined recommendations to end what it believes to be significant delays and overcharging taking place within the leasehold transaction process.
With a growing number of leasehold transactions taking place each year across all UK regions – 260,000 in 2015, from 220,000 in 2011, according to the Land Registry – the CA wants to see a streamlined process cut unnecessary delays and the “unwarranted” fees charged by many lease administrators.
A leasehold survey of 136 conveyancers in January found 56 per cent of member firms said they believe administrators often (in over 30 per cent of transactions) charge unreasonable fees.
Two thirds of estate agents stated the provision of leasehold sale information causes problems in the house-moving process, with 34 per cent branding it “an absolute nightmare”.
Common problems the CA identified were a complete lack of registration or regulation required for lease administrators, which causes significant delays to find the right person or company.
Another problem is imbalance of bargaining power between the administrator and the leaseholder. There is no requirement for the publication of costs or any control over their extent in relation to receipt of service of notice, deed of covenant, share transfer or certificate of compliance.
The CA cited costs levied of up to nine times more than what the conveyancing industry might expect them to charge for carrying out such work. On average, lease administrators are charging between £250 per hour and £360 per hour for administrative work, it added.
There is also often a duplication of costs, with leaseholders required to pay multiple parties to complete their Leasehold Property Enquiry form.
A final complaint was about the lack of redress system available to existing or incoming leaseholders, with no effective consumer rights and no recourse to the ombudsman, given its lack of jurisdiction over costs, unless a complaint is in respect of a breach of agreement for those costs.
| CA aims to tackle these problems: |
| To reduce delays in the provision of information required in the conveyancing process |
| To enable the delivery of reasonable and proportionate administrative charges |
| To create a level playing field across managing agents, management companies and landlords. |
| For relevant parties to provide information in a timely fashion to reduce the delays in the home moving process. |
Specifically, the CA wants an update to the Commonhold and Leasehold Reform Act 2002, to:
• Include all administrative payments to lease administrators by any party to be a reasonable fee and these fees should not be duplicated were there are multiple administrators.
• Include an obligation to provide the data within 20 days of receipt of payment.
• To require any lease administrator providing this service to be a member of one of the three existing property ombudsmen schemes.
• To grant jurisdiction to the first tier tribunal to hear all cases not resolved by the ombudsmen.
• Digitisation of lease administrators held by Land Registry to create a lease administrator’s register.
Beth Rudolf, director of delivery at the CA, said the process of purchasing a leasehold property can be fraught with delay and unexpected extra costs that seem arbitrary in the extreme.
“Talk to those who have gone through that process and you will hear an acute sense of frustration.”
She added now is the time for action in order to develop a fairer system, with transparent and reasonable costs, as well as an obligation to provide the data required within a 20-day timescale.
“The extortionate costs being levelled, coupled with a distinct lack of motivation to provide the necessary information means action has to be taken, especially when (by our reckoning) 75 per cent of leaseholders are being charged excessive fees for the work involved – in 2015 this equates to 200,000 cases.”
A recent response to questions raised by Baroness Hayter on the CA’s behalf indicated the Department for Communities and Local Government do not understand the Commonhold and Leasehold Reform Act wording means there is no redress for administration fees which do not relate to supply of information or approvals, according to Ms Rudolf.
Sebastian O’Kelly, director of the Leasehold Knowledge Partnership, congratulated the CA for highlighting these frustrations.
“Sadly, many leasehold owners do have disputes with their freeholders, and the matter rests until the flat is about to be sold. Then up pops the freeholder with demands for immediate cash settlement, and if the matter is not resolved the sale falls through,” he stated.
“The powers a freeholder has to scupper a sale is scandalous. They are disproportionate: many freehold owners have a sub five per cent equity stake in a site, compared with the collective values of the leaseholds, yet makes all the decisions.”
peter.walker@ft.com
