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MP's report highlights the need for expert legal advice in leasehold issues.
A recent report (March 2019) from the House of Commons Select Committee for Housing, Communities and Local Government, has again highlighted that, in many instances, the legal balance of power in leasehold issues is heavily weighted against leaseholders and often leaves them open to the risk of exploitation by developers, freeholders and managing agents.
Daniel Tang, Head of the Leasehold team at Judge & Priestley commented; “Leasehold issues can often be complex and lengthy to resolve. The Select Committee report highlights many traps and pitfalls that the unaware leaseholder can unwittingly fall into, in the absence of expert legal support and advice. It is always sensible to talk with a specialist leasehold solicitor from the outset of any leasehold related issue. The payback can include saving your time, reducing the associated stress and improving the terms of the deal you finally agree.”
The Committee found that flat lessees were at risk of onerous ground rents to a level where properties were unsaleable and unmortgageable, high service charges and one-off bills, imbalanced dispute mechanisms and unreasonable costs to enfranchise or extend leases.
In the report’s recommendations, they called for a range of reforms to the leasehold system, in order to tackle the current imbalances and repeated previous calls for commonhold to be promoted as the preferred model for the ownership of flats.
The Committee recommendations included:
- Legislation to remove onerous ground rents, and existing ground rents should be limited to 0.1% of the present value of a property or up to a maximum of £250 per year. Onerous permission fees should be restricted by legislation. Freeholders could be compensated, but not necessarily at full value.
- That commonhold should become the primary model of ownership of flats.
- The Competition and Markets Authority (CMA) should indicate whether onerous leasehold terms which are unfair would be unenforceable.
- The CMA should investigate misselling in the leaseholder sector and provide recommendations for appropriate compensation.
- A standardised key features document to be introduced at the start of the sales process by a developer, which outlines the tenure of a property, length of the lease and any ground rent or permission fees.
- That a freeholder's tribunal costs cannot be recovered through the service charge or any other means where the leaseholder has won the case. The Law Commission are urged to provide a process that will make enfranchisement substantially cheaper.
- The introduction of low-interest loans and a Help to Buy scheme for those wanting to enfranchise or extend, who cannot afford to do so or obtain the required finance. (Source: Commons Select Committee, 19 March 2019).