The head of a property management company says conveyancers must do more to ensure buyers of leasehold properties fully understand the implications of their choice of home.
Gary Cane, managing director at Property Block Management, says: ”Too often purchasers have not fully understood the implications of owning a leasehold property. Conveyancers have a duty of care to ensure their clients have a full and proper understanding of their lease, and accountability is currently limited.”
Cane insists there should be a culture shift amongst conveyancers and a move away from what he calls “the current race to the bottom” on price.
“A balance can be struck between speed, price and quality of service. Buyers need to be given the best advice when they are making the biggest purchase of their life, but they also need to be conscious that better quality service may incur a higher cost” he says.
He claims that far too many leaseholders have a fundamental misunderstanding as to what they own when they purchase a flat or a house under leasehold. Increased transparency and a simplification of leasehold practice is essential, he says.
“For example, a summary of Key Facts (similar to financial services) when purchasing would provide a clear overview for those less familiar with the intricacies of leasehold tenure. This also applies to freehold houses when part of an estate” he adds.
“Through increased regulation we can safeguard homeowners against any unscrupulous party that abuses their position of power. We can protect consumers by cracking down on agents that undercut prices and then under-deliver on contracts.
“This is a critical issue, overpromising and under delivering is one thing, but at certain points a lack of knowledge can result in a failure to complete essential checks and maintenance potentially putting people at risk and contributing to a drop in property value.”
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Nice of Mr Cane to offer this advice. Would he also provide his views on how to improve the service provided by hundreds of property management companies that are slow, inefficient and charge the earth for information and documentation that is needed when leaseholders try to sell their properties?
It needs to be made clear to potential buyers of a leasehold property that they do not own it, they have the right to live there for the remaining years on the lease, and subject to the conditions in the lease. Lease extension costs, possible freehold purchase, permission fees, covenants, and Right to Manage need to be explained, along with possible forfeiture of the lease for non payment of small debts. Service charges and ground rent costs to be made clear. I am not an estate agent or conveyancer. Many solicitors need to do a better job at explaining leasehold, and much more information needs to he available in easily digestible form before purchase. Leases should be written in a more straightforward way rather than in antique English, like a good shorthold tenancy agreement. Far too many people suffer under leasehold with unexpected costs and terms in the lease, and abuse from freeholders and managing agents.
Perhaps Mr Cane should also be seeking to educate estate agents of the intricacies of leasehold properties - that they are not selling baked beans and that for the solicitor acting for the buyer it is a painstaking process to not only gather all the required information but to then explain it all in understandable terms to the buyer
Property Management companies could all be required to provide a prescribed factsheet at the introduction to their own management pack to explain what a lease is and what the tenants are buying into….and therefore paying towards. Set the scene, to answer Mr Cane's own concern.
But I can see no attempt to suggest that. Someone else's problem. No mention of the surveyor to have a fact sheet, or a mortgage company, or the selling estate agent.
Ok, so the conveyancer has to do more as usual. After all we already take on a surveyor's role with drainage searches, environmental searches, flood searches - so why not.
But then again, the solicitor's instilled duty - if you are lucky enough to actually bag a solicitor firm as your conveyancer - is to always put the public's best interest first, not profit.
So, conveyancers could and should indeed step up and do a factsheet, it's a simple fix: all conveyancers should make leasehold clients aware of the 'Living In Leasehold Flats' Guide from lease-advice.org when reporting to them - we have for some time.
But I can't believe for one minute that more conveyancers than not - thus prompting this article - would fail to give a copy of the lease to their client, to fail to explain the duration of it, fail to warn that as the years drop so does the value of the property, and then fail to explain that is may be possible to extend the lease. Or fail to point out that they have a landlord who tells them what they can and cannot do in the flat (covenants) and even a sweep up warning to ask any and all questions a client has, or if they do not understand anything they are reading...before exchange occurs.
Naive no, sarcastic, sadly I am, as we see vast numbers of old Client Property Reports from law firms when we obtain client's deeds, and too many are shocking to read.
I consider the biggest culprits are the law firms who I call ‘dribblers'. The ones who send their buying client piecemeal documents as they themselves receive them. Shocking method of 'reporting'. Talk about no context for the client, no overall picture, a bit by bit jigsaw, which clients will not remember from one communication to the next to link it all together. "Here is a lease of the flat you are bound by, ask any questions"…….next letter: "Here is the seller's completed questionnaire"…….next letter: ."Here are some guarantees"…….next letter: ."here is a copy of the sellers registered title, and this is the plan of the property edged in red"!??? Worse still, imagine sending it all by email to a client. Another random pdf….another random pdf……I can’t stand my own car insurance via pdf, I would go bonkers if my conveyancer deluged me with crucial explanatory documents by drip feed email pdfs.
Instead, add the pdfs together in a 'beginning middle and end Report’ - and not just a few pages, but actually explain the significance of things. The above Guide is a real head start, and then fill in the specifics of the present purchase with the same headings. The Law Society Conveyancing Handbook used to have a suggested written Report, adopt that and improve on it. You’ll have a working precedent in no time.
(Fine, save trees if you want to send to clients electronically - but emails get deleted…a bound written Report is less likely to….and it sits around with your logo on so remains ever marketing you.)
And be prompt about sending your Report out. We target a 4 week exchange max on all deals, communicating regularly with clients even during that time - weekly if not more frequently.
Conveyancing Managers - let's avoid articles like this one, just make sure your clients receive quality, don’t just accept any CV for a new conveyancer, secure quality. Take a sale file, and a purchase file and brainstorm where you could up your game, and impress your clients. I do this weekly! Imagine every deal as if it were your own private sale/purchase. Clients will be delighted, Agents will be too. And conveyancers won’t have to groan any more when they look at an Estate Agent’s Memo of Sale and see the conveyancer they are going to face.
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