Buyers have themselves to blame, not solicitors, over leaseholds, say conveyancers

31 July 2017

Hailstone: wider problem of buyers not listening

Conveyancers have hit back at suggestions they should have prevented the scandal of new homes being sold as leasehold properties with rapidly escalating ground rents, which the government announced plans to ban last week.

Rob Hailstone, chief executive and founder of the Bold Legal Group (BLG), which represents some 650 conveyancing firms, said many buyers would not have acted on warnings given about rent increases.

Since a consultation was launched by the Department for Communities and Local Government on plans to crack down on unfair practices in the leasehold market – including a ban on the sale of new build leasehold houses and tackling onerous ground rents – there have been complaints raised in the media that conveyancers were at fault.

Mr Hailstone said: “Most, if not all, solicitors and conveyancers would have spotted the rent increase clause in a lease and would have pointed it out to their buying client and any mortgage provider, along with a lot of other important issues.

“The sad fact is that in many cases, their buying client will not read or act upon the advice given.

“Most buyers will want to proceed, understandably, with their purchase as quickly as possible, head down and with rose-tinted glasses on.

“Solicitors are not valuers, estate agents, or mortgage providers – their clients can calculate [themselves] as to what the future rent might be.”

He went on that the issue raised the wider problem of home buyers “not appreciating what their conveyancer… is doing for them, protecting their best interests”.

However, he added: “I accept if the rent increase clause was not spotted and highlighted, the solicitor/conveyancer in question may be at fault.”

The Council of Mortgage Lenders handbook at 5.14.9 says: “We have no objection to a lease which contains provision for a periodic increase of the ground rent provided that the amount of the increased ground rent is fixed or can be readily established and is reasonable.

“If you consider any increase in the ground rent may materially affect the value of the property, you must report this to us.”

In a statement, the Council for Licensed Conveyancers said: “All players in the housing market have a part to play in making it work for everyone.

“This begins with the housebuilders or estate agents, who should be clear with their customers about the details of the house they are considering buying and later the surveyors who are confirming the valuation of the property…

“We require the conveyancer to act in the best interests of clients – this includes the lender when the conveyancer is also acting for them – providing good quality, independent information, representation and advice.”

Last month a new property law alliance, the Legal Sector Group – made up of the Conveyancing Association, the Chartered Institute of Legal Executives, the Society of Licensed Conveyancers and the BLG – presented the government with detailed proposals on leasehold reform, including action on unfair lease terms, such as escalating ground rents and transfer fees.

Readers Comments

Nick says:
August 1, 2017 at 7:14 am
Utter bias rubbish! We are trapped and at NO POINT did our solicitors mention the Ground rent clauses or all the restrictive clauses! We were strongly advised to use this solicitors as the ‘builders recommended’ as “they understand leasehold so they won’t cause problems”.
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Miranda Long says:
August 1, 2017 at 8:22 am
The only advice given to me by my solicitor about the leasehold was the length of the term and cost of annual ground rent. The solicitor did not mention that the ground rent would increase, warn me about the restrictive covenants or point out that the cost to buy the freehold would increase by being sold onto a third party. These are very fundamental drawbacks that the developer and solicitor failed to bring to our attention and it begs the question as to why this was the case (presumably because these terms are not appealing and risk buyers not going ahead with the purchase). A person can only act when they are given all the information in the first place.
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Mrs Christine Jackson says:
August 1, 2017 at 8:56 am
I hear what you say, but if my solicitor had simply googled the name of the man who owns my free hold it would have stopped me stepping into his web. He is notorious and I dare not try getting my lease extended until he is firmly caught. In the meantime I pay for his yacht and champagne lifestyle.
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Chris cubbin says:
August 1, 2017 at 9:19 am
Well done you’ve completely missed the point. For the vast majority of victims the rent clauses and increases were not pointed out. Indeed in my case the solicitor got the terms completely wrong!
The way the solicitors and developers are trying to close this down is nothing short of disgusting. People have been missold their homes and the solicitors/conveyencors have not acted in the best interests of their clients.
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Kath Jones says:
August 1, 2017 at 9:34 am
Very biased reporting. My solicitor scribed across my lease that it was a ‘good lease’
It doubles every 10 years.
I would like to know how I should have known more than my solicitor.
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Megan Watson says:
August 1, 2017 at 9:36 am
I think its Mr Hailstone that’s proceeding “head down and with rose-tinted glasses on”. No doubt he will be made to take them off at some point.
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Andy M says:
August 1, 2017 at 10:03 am
These so called professionals go to college to learn their choice and hopefully they retain integrity and honour, Joe public put their trust in these people to do what we pay them to do to look after our interests if the so called professionals neglect to fully inform in layman’s terms then the so called professional is to blame for misleading representation of the facts. If we were all able to study all of these professions we would not need these people. Without trust what kind of society would we be?
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C Tinker-MIll says:
August 1, 2017 at 10:12 am
Mr Hailstone misses the point of the National Leasehold Campaign, which is that the vast majority of buyers WERE NOT informed of the onerous clauses in their lease, and DID NOT have the increases in ground rent highlighted to them.
This was their Conveyancers JOB. It is what they were PAID to do. To imply that buyers rushed in with rose tinted glasses, ignoring warnings is both patronising and untrue. The fact is that most buyers were either mislead, or uninformed. Buyers are reliant on the guidance of their Conveyancer during the process and in many cases, this relationship was abused.
No home buyer WANTS a leasehold home – not once the conditions have been explained to them. If Conveyancers had stepped up and behaved honestly and impartially across the board then this scandal would not be occurring.
Accept your responsibilities and stop passing the buck.
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Cath Williams says:
August 1, 2017 at 10:25 am
I emphatically disagree that buyers are to blame! This article is an attempt to swerve responsibility away from the conveyancers who have questionable alliances with developers and in my experience do not act in the interest of the buyer. The National Leasehold Campaign has nearly 6500 members and their accounts of misinformation or no information at all re onerous lease terms from conveyancers is repeated again and again.
This issue will not go away and searching questions will be asked – time for those responsible to be held to account !
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Heather ransom says:
August 1, 2017 at 10:45 am
This is rubbish! I’m sure most of us were aware of ground rent but NOT aware of restrictive covenants in the lease, surely it’s the responsibility of the solicitor to make their client aware of these??
Sounds like you are trying to deflect any responsibility for ill advising clients.
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Lynne Butler says:
August 1, 2017 at 10:46 am
I can assure you 100% that I was not warned of any doubling clause. I was not at any time given the suggestion that this could affect the saleability of my property (my investment for my children). I paid my solicitors in good faith to act for me, if I did not need an expert I would have done it myself. Then maybe you could have blamed me !!!
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Roger Kingston says:
August 1, 2017 at 11:54 am
Unfortunately our Conveyancers didn’t point out any problems to us – nor did anyone else’s conveyancers mention the issues, strangely enough. Maybe it’s a training or quality issue?
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Ben Hopkinson says:
August 1, 2017 at 12:27 pm
I can only speak for myself when I say, I asked many questions of my solicitor, my broker and my builder. I range my solicitors for example often with questions. Only too be told they won’t know enough untill we exchange contracts. And at the point the solicitor said there were no covenants to worry about and buying the freehold would cost about £500. That’s the normally amount.
I’m paying a solicitor because I can’t do it myself and I need an expert. I asked that expert as many question as I could think of and find. Is it still my fault Dan?
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Lynne Butler says:
August 1, 2017 at 5:48 pm
If I go to a Dr for an operation I expect him to inform me of the risks involved and let me make an informed choice as to whether I take those risks. It is the Drs responsibility to inform me and if he has not informed me of the risks in a manner that could be expected he could be deemed negligent (Montgomery vs Lanarkshire). With my solicitor I would have reasonably expected to be informed of risks of leasehold and I was not, at no time did we have a frank dialogue regarding this. We legitimately pay a professional to be advised of risks to allow us to make an informed choice. We do not go to university to study Law, if we did we would not employ a solicitor. If we are not reasonably informed by the solicitors is this not negligence on their part?
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Tas shaikh says:
August 1, 2017 at 8:19 pm
What a load of rubbish never at any point was the ground rent clause mentioned. Is it not my solicitors duty to point this out to me ?What do I pay them for ?
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