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

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 [1] 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 [2] – 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.