Even so close to the event, I don’t think anyone will be deeming 2017 as the ‘summer of love’.
The summer of ramped-up political and economic uncertainty with the potential for all-out nuclear war would be more like it, but that doesn’t have any sort of ring to it. So, I’ll leave it there.
From a housing market perspective, 2017 has certainly delivered the ‘summer of leasehold’ – again it doesn’t exactly slip off the tongue and won’t make an eye-catching headline but it tells the story at least.
At the time of writing we are less than two weeks from the end of the DCLG’s consultation on ‘Tackling unfair practises in the leasehold market’ and, from a Conveyancing Association perspective, we’re just putting the finishing touches to our own response.
Needless to say, we will be hoping to cajole the DCLG down the right path and offer views, ideas and solutions that look at leasehold in the round, not just in the context of new-build houses, escalating ground rents and freehold costs.
By that I mean we want to see reform to the whole process not just on new-build leasehold – which has clearly garnered plenty of media headlines and interest of late – but also in terms of existing leaseholds and in particular the role of Lease Administrators and the fees they are known to charge, plus their role in adding sometimes weeks of delay to the sale of a leasehold property.
Don’t get us wrong, we do not believe that the sale of leasehold houses should continue – and there’s certainly some evidence to suggest this practice is already on its way out – however we must also seize this as an opportunity to deliver the change that’s required for all leasehold owners and those who may wish to purchase leaseholds in the future.
Part of our major focus on leasehold has been around the Lease Administrators and the fees being charged which, in many cases, could not be said to be ‘reasonable’.
There is a danger here that by simply acting, for example, in dragging down leasehold ground rents to a ‘reasonable level’ that the Administrator/Freeholder simply ups its consent fees and/or administrative fees in order to recoup any lost ground rent. That can’t be allowed to happen as all we’ll be doing is moving exorbitant costs to another area but they will still have to be paid by the leaseholder.
In that sense, we believe ground rent should be dropped down to reasonable levels, and administration charges should be based on a tariff of fees set by the Secretary of State, not an arbitrary, profiteering number plucked out of the air by the Lease Administrators and based on pure fantasy, rather than the actual time and effort it takes to conduct the work.
Given that we already have, for example, prescribed conveyancing fees for dealing with a Help to Buy property, there is a precedent to have a Government-set tariff of fees that Lease Administrators have to abide to, plus of course they should all be registered and be members of a redress/compensation scheme which holds to account those responsible for unreasonable delays. This could increase the speed of the average leasehold transaction by three weeks.
These are just some of the suggestions we will be making in our response and we are urging all property market stakeholders – including agents – to make their views known on this issue.
It may interest agents to know we will be advocating the take-up of Commonhold as a replacement for leasehold – a prospective solution for many of the issues and problems of leasehold and one that would ultimately cut out the ability of developers/house-builders to opt for leasehold purely in order to make profit.
Needless to say, we expect some pushback from interested parties on this one who no doubt will trot out the usual arguments against Commonhold, for example, you can’t get insurance, you have to go to court to resolve a dispute, it will create discord between homeowners, etc. All of which have been refuted by our recent Commonhold Unit Holder survey.
Of those who actually own Commonhold 80% are happy or delighted with Commonhold - that’s against the 57% of leaseholders, quoted by the then Housing Minister who ‘wish they had never bought leasehold’.
So, while the ‘summer of leasehold’ comes to end, the ‘autumn of prospective leasehold change’ is upon us – again, this could be one for finer wordsmiths than I to work on.
September 19 marks the final date for consultation responses and after this we should all be expecting some fundamental reform to be announced, hopefully before the end of the year.
One senses there is plenty of support amongst stakeholders and the government to deliver on this; now we just have to make sure that the reform is right for the market and all leaseholders, and we address all of the issues not just those that might have made the loudest headlines.
*Eddie Goldsmith is Chairman of the Conveyancing Association (CA)