A WELSH law company is warning its clients about the potential financial pitfalls involved in buying a leasehold property and will be issuing a new guide to educate buyers about the often- hidden costs.
Specialist legal conveyancing company Convey Law, members of The Conveyancing Association (CA) – the leading trade body for the conveyancing industry, has announced it will be distributing a consumer guide on leasehold property, specifically outlining the fees and charges that clients may have to pay to a Lease Administrator and help avoid shock fees further down the line of the ownership of the home.
Leaseholds usually apply to the purchase of flats and apartments, but houses can be leasehold too, usually if they are bought through a shared ownership scheme. You only own a leasehold property for a fixed period of time and have a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’. This tells you how many years you’ll own the property.
However, Newport- based Convey Law, which employs 80 people from its headquarters in the city-centre, says buyers are often unaware that their leasehold purchase can also incur extra charges and responsibilities. These include escalating annual ground rents, leasehold/ new-build management fees and service charges.
The document entitled, ‘Leaseholder Guide to Lease Administration Fees’, put together by the CA, has been published for those consumers who already own, are looking to purchase, or are selling a leasehold property, and is designed to outline some of the responsibilities that come with such properties and the types of charges that might be part of the lease and may be payable to the Lease Administrator.
Lloyd Davies, Managing Director at Convey Law and Operations Director at the CA said: “Part of the major problem we see with the fees associated with purchasing, selling or owning a leasehold property is that many consumers simply have no idea about the potential charges involved and how they might escalate over time. We have focused strongly on the Lease Administrators during our leasehold campaign, working with the leasehold and legal industry bodies to reduce the instances of those who charge unreasonable fees for their services and to counter the amount of time it can take for the information to be delivered.
He continued: “There has been a considerable amount of media and consumer interest recently around issues such as escalating ground rents, leasehold new-build, management fees and service charges, and the Guide has been designed to cover off a number of these issues, outlining the charges and helping consumers understand what they will have to pay.”
The Guide covers the three types of charges often associated with leasehold property, namely:
- Ground rent;
- Service charges; and
- Administration charges.
It provides information any prospective purchaser should have with regards to their cost now (and in the future), and the importance of securing this information upfront before any exchange of contracts.
In terms of ‘Administration charges’, the Guide looks at those most often charged by Lease Administrators when a leaseholder sells, when a consumer buys a leasehold property, and during the course of ownership. These can range from:
- When you sell – leasehold property enquiries and exit/transfer fees.
- When you buy – Deed of Covenant, Notice of Assignment and Charge, Certificate of Compliance, and Stock Transfer.
- During ownership – consents, Notice of Charge, Deed of Variation.
The Guide outlines exactly what these charges are and why the leaseholder might need this information from the Lease Administrator.
Finally, the new Guide also looks at the very important issue of the reasonableness of the fees charged by Lease Administrators, what these fees should typically be, and the process currently available to leaseholders if they wish to dispute unreasonable fees.
Convey Law has been working closely with the Conveyancing Association as it focuses on the leasehold process, in particular, lobbying to cut the excessive fees some Lease Administrators can charge, and the delays that can occur. The CA has campaigned strongly for fairness and transparency, and part of that campaign is the publication of this Guide to raise greater awareness amongst consumers about the costs involved and what they can do if they feel they’ve been charged too much.
Convey Law will be issuing this guide to leasehold clients, plus it is being sent to all consumer groups and LEASE – www.lease-advice.org – which provides free initial advice and guidance to consumers about residential leasehold and park homes law.
‘Leasehold Guide to Lease Administration Fees’ is also available from the ‘Featured Downloads’ section on the CA website home page: www.conveyancingassociation.org.uk
Gareth Richards, Legal Director at Convey Law, added: “We deal with many leasehold transactions and, whilst each one is different, there is a commonality to the leasehold process and the potential fees that our clients could have to pay. This guide covers off all those issues, and should leave buyers in no doubt of the costs that can occur with a leasehold transaction, and the potential difficulties that might arise. We believe this is a major step in the right direction from the CA, and as active and supportive members we will be issuing this Guide to all our leasehold clients and working to improve the understanding around this process.”
“Part of the major problem we see with the fees associated with purchasing, selling or owning a leasehold property is that many consumers simply have no idea about the potential charges involved.
For further information on Convey Law, please visit: www.conveylaw.com.
For further information on The Conveyancing Association, please visit: www.conveyancingassociation.org.uk