Selling a Leasehold property with a Management Company
Several solicitors’ firms are calling for the residential leasehold sale process to be altered in 2017, to try and put an end to unacceptable delays, high fees, and excessive ground rents being charged. After all, sellers simply want push their transactions though as efficiently and cost effectively as possible.
According to the Conveyancing Association, 57% of people who purchased leasehold properties regretted doing so. This was due to a lack of knowledge about Leasehold property and the associated requirements on sale.
When buying a leasehold property, with a Management Company involved, prudent solicitors must carry out a number of checks. For example, they ensure that any Ground Rent or Service Charge accounts are paid up to date; that the Lease contains certain rights – such as adequate rights of access and support and that suitable provisions in respect of the maintenance of the property/ communal areas are in place. The management pack also contains information as to any large payments which are expected to be incurred in the short term future, which can impact on affordability.
This information is contained in a ‘Management Pack’ (also known as replies to LPE1) which is paid for, commonly, by the seller. In some cases, there is not just one, but two parties involved in respect of the management of the property and the collection of ground rent – and this can be expensive. On average a management pack will cost in the region of £250.00 to £400.00 in the North, and sometimes much more in the South.
In addition, The Conveyancing Association has reported that, on average, there is a 20 day delay in transacting leasehold sales. Often, this is due to problems in identifying the Leaseholder, establishing the Leaseholder’s Fee for providing the Management Pack, and obtaining this fee from the seller.
Further delays are involved in waiting for the Management Pack from the Landlord or Management Company to land – when the information contained in these packs is frequently standard to the entire site.
For these reasons, it is important that you and your solicitor start this process as soon as you have found a buyer.
Towards the end of 2016, these problems were brought to the attention of the Government. In a discussion in the House of Commons at the end of 2016, the Housing Minister, Gavin Barwell, stated that he was not happy with the current situation.
The Conveyancing Association have announced that they aim to address the issues regarding the Leasehold process, and the excessive fees charged. Further to their annual conference in December 2016, the Conveyancing Association have confirmed that they will issue a list of suggestions and action points, which will be the focus of 2017.
Watch this space!
For more information regarding leasehold properties, or the conveyancing process, please feel free to get in touch with members of MLP’s Residential Property Team, Anna Nuttall and Lucy Harrison, on 0161 926 1509 or firstname.lastname@example.org.