Leaseholders left with ‘no effective rights’ over administration charges
Lease administrators charging unreasonable fees for managing leasehold properties should be subject to stricter regulation, according to trade body the Conveyancing Association.
Leaseholders have been hit by charges as a high as £360 per hour for basic administrative work, leading the Conveyancing Association to push for a change in the law.
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.
“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.”
Highlighting the difficulty of identifying many lease administrators and disproportionate legal fees charged by many management companies, the CA has called for a range of new measures.
The proposed changes would include legislation to ensure all administrators are members of an existing ombudsmen scheme and that the fees they collect are reasonable.
It is hoped new legislation would also force administrators to respond to requests for data within 20 days and allow the first tier tribunal to resolve disputes not solved by the ombudsmen.
With a growing number of properties purchased on a leasehold basis, the key recommendations are intended to end the problems for chains of house movers caused by sales falling through.
According to the CA, 62% of estate agents say the provision of leasehold sale information causes issues in the house-moving process, with 34% branding it “an absolute nightmare”.
In a recent leasehold survey of conveyancers, 56% of CA member firms believed lease administrators often charge unreasonable fees, and a further 32% believed they regularly charge unreasonable fees.
Rudolf added: “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.
“We will continue to work with them to provide a platform for the industry to develop solutions to right these wrongs. By changing the Commonhold and Leasehold Reform Act 2002 and collating a register of all Lease Administrators we will go a long way towards developing a process which is far fairer and more fit for purpose for what looks likely to be a growing number of transactions within the purchase market.”
The number of leasehold transactions taking place in the UK continues to grow. According to figures from the Land Registry the number of properties increased to 260,000 in 2015, up from 220,000 in 2011. In greater London leasehold properties represent 57% of all transactions and 40% in the North West.