Reform – Legal Sector Group suggestions

Reform slide

Quote: “The Legal Sector Group (LSG) – comprised of The Conveyancing Association (CA), the Chartered Institute of Legal Executives (CILEx), Bold Legal Group (BLG) and The Society of Licensed Conveyancers (SLC) – have today (20th June 2017) published its complete proposals on Leasehold reform.”

I have already referred to the response by the Conveyancing Association (CA), in which the CA associated those suggestions with its contribution to the Legal Sector Group consultation.

The LSG’s response comprises three pages of bullet points (for what its worth, by comparison I submitted a 42 page response not counting appendices, but I included a lot of case law, calculations, and graphs – might as well be overlooked on a large scale!).

The LSG break their issues into 8 headings:-

  1. Reasonable Fees for Administrative Activities

  2. Reasonable Timescales for Administrative Activities

  3. Enforcement

  4. Unfair Lease Terms

  5. Overhaul of Tenure

  6. Building Insurance

  7. Management Regulation

  8. Marketing of Leasehold Properties

As you can read for yourself, each heading is followed by concise bullet points without elaboration. I will pick out a few that caught my eye…

1. Reasonable Fees for Administrative Activities

The abuse by freeholders and/or agents of their powers during lease conveyancing is nothing short of criminal. I agree with set tariffs and standardised documentation for “notice of assignment, notice of charge, stock transfer, deed of covenant and certificate of compliance”. It ought not to be rocket science.

What I find difficult is the suggestion that RICS could be an appropriate agency to ensure these procedural matters operated correctly. I say this having once assisted to appoint a RICs member managing agent who was so appalling our RTM company had to terminate their contract. This is the problem with leasehold. There is a gulf between experience and theory.

3. Enforcement

As above, reported experience of ombudsman schemes in this arena offer me few crumbs of reassurance.

4. Unfair Lease Terms

Whereas the CA suggested 999 year leases with peppercorn ground rents before moving to alternatives, the LSG seems to refer to no less than 250 year terms and ground rent reviews based on RPI every ten years, albeit at 50%.

5. Overhaul of Tenure

If I read the 12 points listed under this heading correctly, although there are excellent suggestions, the LSG proposes outlawing leasehold and requiring Commonhold only in newbuild and conversions “when fit for purpose”. I do not see a suggestion to abolish leasehold?

7. Management Regulation

I like the proposal to regulate reserve funds, and what seems to be a daring suggestion that agents should be able to charge no more than 10% as a basic fee. Given agents used to be permitted 15% and managed to break through this generous barrier without a change in law (tribunals are ever so helpful, aren’t they), not sure how successful this proposal will be.

The question with all suggestions for better regulation is stark: who will regulate the regulators? It seems always to distill to a lazy, ‘kick it into the long grass’, reform clause giving leaseholders yet another paper ‘right’ via an application to a tribunal.  So far this right has not, self evidently, produced effective rights or we would not be where we are.

I read the LSG as making very good suggestions, but frustratingly seeming to overall accept that the feudal landlord-leaseholder system cannot be abolished.

I am not a lawyer, but I look around the world and wonder why not? What is it with the English system?

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