The Conveyancing Association has come up with recommendations to end delays and rip-off charges when leasehold homes are bought and sold.
Delays can be so prolonged that at best, they try the patience of agents and clients, and at worst sales fall through and chains collapse.
The Association says that reform is badly needed, with a growing number of leasehold transactions taking place each year across all UK regions – 260,000 in 2015, up from 220,000 in 2011 (Source: Land Registry).
In London, 57% of all transactions are of leasehold properties, and in the north-west the proportion is 40%.
The Conveyancing Association wants to see a streamlined process taking out delays, and a cut to the ‘frankly extortionate’ fees charged by many lease administrators – those who administer the terms of the lease – to the leaseholder.
In a recent survey, 56% of CA member firms said lease administrators often (in over 30% of transactions) charge unreasonable fees, and a further 32% said lease administrators regularly (16-30% of transactions) charge unreasonable fees.
On top of this, 62% of estate agents said the provision of leasehold sale information causes real issues in the house-moving process, with 34% branding it ‘an absolute nightmare’.
Common problems include identifying who the lease administrator is; getting them to release information; overcharging – often between £250 and £360 per hour, way in excess of what conveyancers themselves charge; duplicate charging; delays so serious they cause sales to fall through; and no redress system.
The Conveyancing Association wants to see all of these problems ended, including an update to the Commonhold and Leasehold Reform Act 2002 to ensure that lease administrators can only charge reasonable fees.
It also says there should be an obligation to provide the requested data within 20 days of payment; a requirement that leasehold administrators belong to one of the three property redress schemes; and a register of all leasehold administrators.
Beth Rudolf, director of delivery at the Conveyancing Association, said: “For many people, the process of purchasing a leasehold property can be fraught with delay and significant 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 that begins with attempting to track down the Leasehold Administrator, moves on to trying to get the necessary information out of them within a normal timescale, and finally ends with sometimes multiple charges to different parties, often for the same tasks, which in no way reflect the level of work required to deliver that information.
“Given this, and the fact that the number of leasehold transactions continues to grow, the CA believes now is the time for action to take place in order to develop a much fairer system, with transparent and reasonable costs, as well as an obligation to provide the data required within a 20-day timescale.
“The quite frankly extortionate costs being levelled by some, coupled with a distinct lack of motivation to provide the necessary information, means action has to be taken, especially when by our reckoning 75% of leaseholders are being charged excessive fees for the work involved – in 2015 this equated to 200,000 cases.”
Comments (5)
Leaseholds are a nightmare, whilst we can sit and moan about solicitors etc there’s so much involved it’s no wonder the transactions take longer.
What I disagree with, is management companies charging £250/£350 for management packs – Owners should automatically keep hold of all of this information and when it comes to sell the property they give the agent/solicitor the pack in readiness for the sale.
Got a sale on a maisonette which agreed in February and still hasn’t exchanged, small issue with the lease referring to a loft as “upper floors” which the buyers solicitor wouldn’t accept but I had to explain they needed a deed of variation. if I hadn’t told them to go down this route the sale would have blown out – like in all jobs there’s good and bad.
As with all walks of life there are good and bad Management Companies and good and bad Conveyancers.
Jacquelline above has probably dealt with us and we turn the questionnaires around normally in 5 working days and can do it in 48 hours if required.
From our point of view the questionnaire needs to be sent out asap and not 24 hours before completion which happens far more regularly than we would like
A little bit of time put in with pre- contract details when listed and not fire fighting after a sale is agreed would help. Never ceases to amaze me that everyone knows the pit falls of lease purchase but don’t plan ahead. Charges do need reforming and should be “declared” when an offer is made and not find out later. Bring back HIPs style for leasehold?
I agree entirely that something needs to be done about this. I never cease to be amazed at the amount of money these companies charge. However, I think it is set to get worse. If you consider new builds many are now leasehold. Is this to do with the fact that local authorities no longer wish to adopt new build estates. Thus the builders management company manages the estate and of course the owners of the properties pay for this in addition to their council tax. It’s becoming a huge problem in Newcastle Upon Tyne.
Leasehold sales can be the bane of life at points…I’d love to see a penalty charge introduced for slow Leasehold Administrators / Freeholders so that they all get their act together. If you’re in charge of the freehold of a building, yes it’s an asset but it’s still a responsibility. I’d also like to see a formal register, including contact details of the person that does the lease administration, so the relevant party is easily identifiable and contactable. Even if the fees remained similar, to get leasehold sales up to speed would make a great difference.