Conveyancing

Cheaper lease extensions for homeowners?

The Law Commission has recently published its proposals outlining a number of ideas of improving the system for acquiring lease extensions and purchase of freeholds. Their proposals cut the overall cost for leaseholders as well as simplify the two processes. This is part of the government’s push to reform leasehold due to flat and house owners being unable to sell or remortgage their homes because of onerous lease clauses.

Marriage value and a similar premium called hope value are being proposed for removal. These are currently added to leaseholders’ costs because of the potential gain they could obtain from purchasing their freehold. For example, the removal for the need to pay ground rent or an increase in property value when a leaseholder comes to sell.

According to the Law Commission, these proposals could wipe around £6,000 from the cost of purchasing a freehold. It gave the example of a £250,000 property, with a 76-year lease, paying ground rent of £50 a year, rising to £200. Under current legislation, the purchase of the freehold would cost the homeowner around £16,453.

The first option which is eliminating marriage or hope value could bring the cost down to £9,155. The second option which is replacing marriage value with hope value could bring the cost down to £10,615.

There is a third option which is to maintain the current method for valuing freeholds but tweak some of the calculations. These calculations would be prescribed which in turn, provides more certainty for leaseholders.

The Law Commission report also provides details of other options called ‘sub-options’ which merge in some other ideas with the 3 main suggestions. One of these, is the development and use of a prescribed calculator for lower value or straightforward claims. This would make it more “user friendly” for leaseholders and give them more of an accurate idea of the upfront costs for an enfranchisement.

The report gives government lots of options to consider and where to strike a balance on the redistribution of wealth and power in the leasehold sector.

The proposals have already been criticised as not being radical enough which is not unsurprising. The Law Commission have commented that any change too radical would be open to challenge under the Human Rights legislation. ■

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Conveyancing in 2030 – looking to an electronic future

As we enter a new decade, the Council for Licensed Conveyancers (CLC) is looking to the future. Conveyancing 2030: A Discussion Paper, draws on discussions we have had with conveyancers, software developers, mortgage lenders, academics, entrepreneurs, HM Land Registry, the Ministry of Housing, Communities and Local Government and consumer groups.

The CLC has looked towards a world that is far enough away to be hard to predict in detail, but close enough in time to know that we need to start making preparations soon.

Conveyancing 2030 predicts the role of the conveyancer is undoubtedly going to change as much of the administrative side of the role becomes automated over the coming years.

I think many lawyers will be heartened by the prediction that there will be a greater focus on advisory work as the market changes and that it can be used to create a point of differentiation.

Conveyancers will bank both time and cost savings, to be reinvested in improving the quality of service, upgrading technology and ensuring cyber security.

The paper sees property lawyers focusing on advisory work where the quality of service – as rated by external comparison or feedback websites – will be decisive in where instructions go. It finds that “as the role changes, property lawyers will need to invest in training and skills acquisition for themselves and their staff. Soft skills such as communication skills, listening skills, and empathy will become ever more important as the ability to build relationships becomes even more central.”

“Technology will radically improve transparency for consumers about what they are buying and the progress of their transaction. Because of the Internet of Things, properties will maintain up-todate logbooks with little human intervention,” it says.

Upfront information about a property at the point of marketing – rather than waiting until later in the process for it – will be key to this.

The paper traces how the conveyancing process has and will continue to change, and highlights a range of questions that everyone involved – regulators, lawyers, estate agents, lenders, technologists and others – will have to grapple with to ensure that consumers benefit from it.

While the paper does not try to provide answers to all of the issues identified, it seeks to highlight areas the CLC believes will need consideration by regulators, those in conveyancing and the wider stakeholders who will affect and influence how conveyancing will develop.

Key questions for the industry include whether Government should mandate the move to electronic conveyancing, rather than wait for incremental change, whether the law firm model will need to evolve to survive, and the extent to which regulators might need to regulate technology in addition to lawyers.

Conveyancing 2030 stresses how central data will become, delivering a ‘single source of truth’ on a property. But what needs to change to ensure all parties can trust the data? Who will validate the information and who becomes responsible if that data is incorrect or something goes wrong?

While we can predict certain shifts in the market with confidence – in particular the inevitable move to electronic conveyancing – how they play out over the next decade remains uncertain.

With so much work going on to improve and reform the process, we think now is the right time to take a wider view on what this all means in the long term and how we can ensure that the home buying and selling process works best for consumers, service providers and ultimately the UK economy.

We do not claim to have all the answers but with change coming it is vital that we as a regulator and the community we regulate are thinking about how we make sure we are ready for what future developments may bring. I hope this report will fuel a discussion across the property industry and that conveyancers themselves will grasp the opportunity to shape their future.

The discussion paper explores six areas for future developments and readers are encouraged to join in developing the thinking and contribute to shaping what conveyancing may look like in 2030.

This is the beginning of a discussion and we hope that all conveyancers will want to be part of it. You can find the discussion paper on our website at https://bit. ly/2O7Oum6 and you can have your say by emailing Conveyancing2030@clc-uk.org or completing an online form at https://bit.ly/2S23x21 ■

Dame Janet Paraskeva Chair, Council for Licensed Conveyancers (CLC)

Premium Plus Planning Environmental | Flood | Ground Stability | Energy & Infrastructure | Planning

 Report Details

 Subject Site

Address: Sample, Sample

Grid Reference: E: 123456 | N: 123456

Report Reference: Sample

Requested by: Sample

Date: 01/10/2019

Report ID: 115125

 Professional Opinion 1.ENVIRONMENTAL No further recommendations PASS

2.FLOOD Consideration(s): 2.03 Specialist Advice 2.06 Check Flood History

3.GROUND STABILITY Consideration(s): 3.15 Consult Surveyor

4.ENERGY & INFRASTRUCTURE No further recommendations

5.PLANNING Next Step(s): Applications Identified Telecom Application(s) PASS

PASS

PASS

NOTE Air Quality Index: Some Polluted Areas (See 1.25)

This page should always be read in conjunction with the full report. The Professional Opinion indicates the potential risks and any other potential issues associated with the property. The results should be disclosed to client and/or lender and/or insurer as appropriate.  A ‘Pass’ is given if no potential property specific risk has been identified.  A ‘Pass with Considerations’ is given where there are potential hazards in the locality to bear in mind, or if there are features nearby which some clients might consider could affect them.  A ‘Further Action’ is given if there is a potential property specific risk and a further action is advised. In the event of a request to review the Professional Opinion based on additional information, or if there are any technical queries, the professional advisor who ordered the report should contact us at info@futureclimateinfo.com, or call us on 01732 755 180.

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If you require assistance, please contact your Search Provider or alternatively contact FCI directly with your Report ID. Tel: 01732 755 180 | Email: info@futureclimateinfo.com | Web: www.futureclimateinfo.com

Planning

 Report Details

Address: Sample, Sample

Grid Reference: E: 123456 | N: 123456

Report Reference: Sample Requested by: Sample

Date: 01/10/2019

Report ID: 115138

 Planning Summary

Extensions and New Builds

Developments

Change of Use

Certificates Lawful Development

Telecoms

Uncategorised

 Subject Site

Air Quality Index: Now available in FCI Premium searches

7 within 100 metres

11 within 750 metres

0 within 100 metres

within 100 metres 0

within 250 metres 1

within 100 metres 2

within 250 metres Identified see section 1.03

Charlton: Neighbours’ Fury at 330-home Tower Development

Image courtesy of The Charlton Champion

Greenwich Council faced a major public outcry when they backed plans to build 330 new homes on the site of a former warehouse on Victoria Way in Charlton, South East London. Tim Champney, Managing Director of Future Climate Info, explains how new transport links are encouraging more large scale new build development into traditional residential streets unchanged for years.

Surprisingly close to Canary Wharf and with fast transport links to central London and Crossrail nearby, Charlton’s quality period properties are two thirds the price of those in next-door Greenwich and Blackheath.

Over the next 25 years up to 5,000 new homes, along with new shops and restaurants, schools, a riverbus pier and a “creative quarter”, are to be built on a 275-acre swathe of industrial land overlooking the Thames Barrier.

This site was not part of the Charlton Riverside master plan and places new build apartment blocks right up against highly regarded Edwardian property.

“Overbearing” Plans The Fairview New Homes proposals included two 10-storey blocks and 144 car parking spaces, as well as a nursery and office space. The scheme comprised a mix of low rise with tower blocks, including 35% affordable homes and rented accommodation. The nursery would attract 22 local jobs according to OFSTED requirements and a new B1 employment building, suitable for small businesses, could generate 85 job roles.

In spite of this, local residents lodged 125 objections, alongside those of local councillors. They raised concerns shared by Transport for London and the Greater London Authority about the amount of parking spaces that were included and encouraged.

Neighbours called the plans “overbearing” and had voiced concerns about traffic congestion and the lack of facilities for residents. Others criticised a lack of consultation about the scheme.

“A Dangerous Precedent” Fairview New Homes had also built an 8-storey block of flats on the corner of nearby Gallions Road. They were originally refused planning permission in 2015/16 to build a 10-storey block, as it was deemed out of scale and keeping with the surrounding houses. Concerned residents challenged Greenwich Council on why they had applied different rules barely 100 yards away.

The two 10-storey blocks, one 9-storey block and three 8-storey blocks would all have visual impact, while residents of Gurdon Road said that the incline of the hill would mean that properties would be overshadowed by a three-storey block.

The development sits outside the area zoned for tall buildings and local councillors were concerned that this has now set “a dangerous precedent”. Concerns about congestion had already led the London Fire Brigade to ask for a yellow box junction to be installed outside East Greenwich fire station because engines were having trouble accessing the road even before the increase in traffic from the new build.

There were also concerns raised about the scheme only having one point of access for vehicles, on Victoria Way, which had effectively become “arterial roads” and that any development would exacerbate this and cause “irreversible damage”.

Kerb Appeal under Threat The scheme is an example of how the character of an area can be transformed through one development – in terms of impacts on traffic, noise, facilities. The sight lines of many of the late Victorian/ Edwardian houses would also be badly affected, as you can see from the above illustration. Image courtesy of Homes & Property

Your client could have fallen in love with the kerb appeal of one of these houses and thought about how their future there – only to be faced with the grim reality of a modern apartment block directly across the road from them. Would you have spotted the impact this could have?

FCI has launched a new suite of planning reports to help residential conveyancers to minimise this risk for their clients. Planning application data is pulled “live” from our data supplier at the request of each report, ensuring that the very latest available information is used to compile the product.

Using FCI’s unique intelligent FCICapture technology, we identify developments which, although lying outside of the search boundary, if completed may, in reality, extend within the area of interest around the subject property.

This means schemes like that in Charlton which could have a strong visual and traffic impact are more likely to be picked up than may be the case in other similar planning searches.

You can combine this unique approach to planning data with contaminated land, flood and ground stability checks in a single environmental report or order a separate planning search report. For more information, contact us on 01732 755 180 or email info@futureclimateinfo.com ■

Computer says ‘yes’

With our innovative smart forms, you can monitor your clients’ progress in real-time.

You know the routine, you post off the inception forms and lo and behold the client sits on them. Well, now you have the power to speed up the process. Our online smart forms mean clients can complete forms from anywhere, on any device. You can even monitor their progress and ‘politely’ nudge them along. The entire process is fast, easy, secure and completely paperless – no printing or postage necessary. And to discover just how smooth the experience can be for you and your client, just sit tight – we’ll come to you. After all, the experience is everything.

Why would a property be repossessed? It’s common for most residential leases to include a provision whereby the leaseholder must pay the freeholder ground rent – this is often a nominal annual fee.

However, in some areas (e.g. London), it can be as much as £2,000 or more and it’s becoming increasingly common to see ground rent double every 25 years. In some cases, dependent on the level of ground rent, the landlord can treat the long lease as an Assured Tenancy or AST.

As you can imagine, there is unfortunately very little protection available to lessees or their lenders, and under an AST there is no relief from forfeiture.

How can the risk be mitigated? At Guaranteed Conveyancing Solutions (GCS), we offer a comprehensively worded legal indemnity insurance policy that covers the interests of the mortgage lender whose security would be threatened if the landlord were to succeed in forfeiting their borrower’s lease.

Repossession Under Housing Act

– GCS Legal Indemnity Policy Available!

Our ‘Forfeiture of Lease (Housing Act Repossession)’ policy provides cover to the mortgage lender of a residential property when the freeholder/landlord of a long lease attempts repossession of the property using a Section 8 Housing Act 1988 Notice due to outstanding ground rent under a long lease. This policy, plus many more, is available through ‘GCS Online’, where registration is quick and simple. Once registered, all policies can be issued in a matter of minutes and cover is in place immediately. Premiums for this policy start from just £17 (incl. IPT).

Why choose GCS? GCS is a trusted market leading provider of legal indemnity insurance. All our policies are comprehensively worded and can be self-issued by conveyancing professionals or obtained directly from us.

We offer numerous ways in which our policies can be issued, including online, which are all supported by our friendly team of highly experienced underwriters – it’s no surprise that we’re trusted by over 20,000 conveyancers.

To register, get a quote, or to find out more about our broad range of comprehensive legal indemnity insurance policies, please visit www.gcs-title.co.uk. ■

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