Conveyancers continue to push for reform of leasehold legislation

The Conveyancing Association (CA) is determined to press ahead with its campaign to reform and amend the leasehold transaction process, despite the fact that the government has ruled out forcing landlords of leasehold properties to belong to a redress scheme.

The CA wants to see existing and incoming leaseholders made to join a redress system with effective consumer rights, such as any one of the existing three property ombudsman schemes.

Baroness Hayter of Kentish Town raised the issue of redress schemes for landlords of leasehold properties in a Department for Communities and Local Government (DCLG) debate in July. She asked if the government was planning to extend the requirements of the Consumers, Estate Agents and Redress Act 2007 and the Enterprise and Regulatory Reform Act 2013 to require landlords of leasehold properties to belong to a redress scheme. But minister Lord Bourne said that the government “is not persuaded that more burdensome approaches to regulate landlords would be effective”.

Bourne said leaseholders in dispute with a landlord can apply to the first-tier tribunal (property chamber) in England and the leasehold valuation tribunal in Wales to seek redress.

He added: “The government is extending leaseholders’ access to redress by including provisions in the Housing and Planning Act 2016 that will address an irregularity concerning the inability of courts and tribunals to restrict recovery of a landlord’s legal costs from leaseholders as administrative charges, where they consider a restriction on recovery to be just and equitable. The government plans to introduce related secondary legislation by summer 2017.”

However, Lord Bourne’s response to the question as to whether the government plan to require landlords of leasehold properties to belong to a redress scheme indicated “the lack of appreciation by the DCLG as to the loophole within the Commonhold and Leasehold Reform Act 2002”, according to Beth Rudolf, Director of Delivery at the CA.

Rudolf pointed out that the first-tier tribunal is only granted jurisdiction in the Commonhold and Leasehold Reform Act 2002 over administration fees in respect of approvals or consents and therefore there is no form of redress for items such as Notice of Assignment, Deed of Covenants (unrelated to an application for consent), Certificate of Compliance or Transfer of Shares.

This has resulted in up to 75% of leasehold home movers being charged unreasonable fees, according to a recent survey by the CA.

Rudolf added: “Recent cases in the upper tribunal which sets precedent confirms that the Commonhold & Leasehold Reform Act wording is very restrictive, as confirmed by the Judge in Proxima –v- McGhee (2014) and Mehson Property Company Ltd –v- Pelligrino (2009) where neither the administration charges for a Deed of Variation nor the registration of an underlease with the Landlord could be considered within the Act’s definition.

“Similarly, there are no provisions for redress in respect of delay in the Leasehold sales process.  Over 30% of home movers according to our data have to wait over 30 days to obtain the information they need to sell their home and that is after they have paid the Lease Administrator’s, often exorbitant, fees.  It’s no wonder Leasehold transactions take on average four weeks longer to exchange and that has a big impact on the economy with 260,000 leasehold transactions annually.”