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Conveyancers Lead Push For Leasehold Reform

Conveyancers Lead Push For Leasehold Reform

The leasehold sector has been the target of fierce criticism in recent months as a result of what many consumer organisations and politicians see as unfair ground rents, particularly those imposed by house builders on buyers of new properties.

The recent Queen's speech contained a clear commitment from the new Government: “ We will consult and look to take action to promote transparency and fairness for leaseholders. We will look at the sale of leasehold houses and onerous ground rents, working with property developers, the Competition and Markets Authority and others as outlined in the Housing White Paper.”

A group of conveyancing and legal experts, known as the Legal Sector Group (LSG), has just published a raft of proposals on leasehold reform. The group includes The Conveyancing Association, the Chartered Institute of Legal Executives and The Society of Licensed Conveyancers and it says it's proposals, produced after extensive consultation should reduce the scope for abuse.

The LSG claims the measures would also speed up the leasehold conveyancing process, reduce costs and offer greater clarity and certainty for consumers.

The eight specific proposals include a tariff of fees “for quantifiable activities and the provision of standardised documents” - although these are not set out by the LSG - as well as “reasonable timescales for administrative activities.”

In terms of enforcement, there would be a mandatory requirement for all freehold management or leasehold administrators to be part of a new “fit for purpose redress scheme” with an Ombudsman presiding over it.

A further measure would insist that no new build home should have an initial lease of less than 250 years with additional measures covering rent reviews, escalating ground rents, and the retrospective application of rules to existing leases which have “unfair terms around escalating ground rents”.

The LSG also wants an overhaul of tenure, covering a review of Commonhold regulations and “a simplification of the process to extend leases and convert to freehold.” This proposal also includes an informally-worded suggestion that Right to Manage should be reviewed “to make it easier for tenants to take the responsibility on if a landlord won’t do their bit.”

Another measure advocates that all landlords with obligations contained in the lease should be required by statute to insure comprehensively for the full reinstatement value.

There is a call for stricter management and regulation of reserve funds with “management charges ... limited to 10 per cent of routine service charges, or in the case of exceptional charges be proportionate to the work to which they relate, excluding payments into the reserve fund.”

Finally, and possibly of particular significance to agents, the LSG wants anyone marketing a Leasehold Property to be obliged to provide upfront information on the remaining term of the lease; this should include setting out whether payment may be needed to increase the length of the lease subject to the requirements of a lender and also details of ground rent, rent review processes and the amount of the annual service charge.

If you would like advice about leasehold property or any other residential conveyancing matter please contact Sue Alexander on 01325 466461 or email sue.alexander@close-thornton.co.uk

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