In his first Comment of 2018, Property Section chair Warren Gordon looks at the year ahead for residential and commercial property solicitors – and how the Section can help
A key theme for the Property Section this year is residential conveyancing and the impact of a number of proposals on the role of solicitors in the conveyancing process.
My view is that new-build leasehold houses could have been preserved, but much stricter controls imposed on ground rent increases – that, after all, is the key mischief
Leasehold has been a hot topic in recent months, especially relating to abuses around the levels of ground rent payable by owners of new-build flats and long leases of houses. There are differences of opinion in the profession and property industry about whether this justifies the government’s announcement in December that it is outlawing future new-build leasehold houses. The Law Society, in its response to the government’s consultation ‘Tackling unfair practices in the leasehold market’, attempted to take a broadly middle ground position, taking account of its public interest remit. We explained that the main justification for selling houses and flats on a leasehold basis is to provide for the repair of common parts, enforcement of mutual restrictions, and automatic continuance of rights when properties change hands. We set out how owning a freehold property does not necessarily cure all the matters giving rise to the complaints. My view is that new-build leasehold houses could have been preserved, but much stricter controls imposed on ground rent increases – that, after all, is the key mischief. It will not necessarily be straightforward to implement the government’s proposals, and we look forward to participating in the process to provide workable solutions.
It is hoped that the absence of ground rents will not disincentivise investment in UK housing. The inability to use leasehold mechanisms will also introduce complications into conveyancing, so the government should also enact the Law Commission’s proposals following its 2011 project, ‘Making land work: easements, covenants and profits á prendre’, which would allow positive land obligations to run with the land and avoid the need for covenants from successors and Land Registry restrictions.
The Society responded recently to a consultation on improving the home buying and selling process. The government is committed to improving the process to make it cheaper, faster and less stressful, and the Society will continue to work on behalf of members to ensure that the proposals improve the process for consumers, solicitors and others involved.
The Property Section’s offering this year will reflect our focus on residential conveyancing, with our National Property Law Conference in October majoring on this theme. Our half-day Conveyancing Convention in June will also pick up on this, with keynote speeches from leading stakeholders in the property industry.
My own expertise is commercial property, and the Section will also continue to focus on key areas of interest for commercial practitioners. The new Electronic Communications Code came into force in December. Solicitors should be revisiting their wayleave and telecoms lease standards to make them suitable for the new code (for more information, see my article in the December 2017 edition, ‘Coded message’). In April 2018, the Minimum Energy Efficiency Standards come into force (both for commercial and residential property), and new lettings will be unlawful if the property has an F or G energy performance certificate rating and no statutory exemption has been registered (I cover this in more detail in my article in this edition, ‘The green light’).
This year also offers a new professional statement on service charges for commercial property, from the Royal Institution of Chartered Surveyors (RICS). The requirements will be mandatory for RICS-regulated surveyors and firms, and the implications for lease-drafting and the management of service charge regimes will need to be closely examined by solicitors, their clients and managing agents. There is also likely to be a new iteration of RICS’s Code for Leasing Business Premises; it will be interesting to see its impact on the commercial letting market. The Property Section will keep its members updated on all these developments.
More generally, firms will have to react to the new requirements under the General Data Protection Regulation, which will apply from 25 May 2018. For more on this, see our article in the September 2017 edition of Property in Practice, ‘Under control’.
This edition of the magazine offers a diverse selection of timely and stimulating articles. Topics include higher rate stamp duty land tax for additional residential properties, technology in conveyancing, changes to the SRA Handbook, and the use of commonhold.
As Section chair, I will be working very closely with my colleagues on the Law Society’s Conveyancing and Land Law Committee and Conveyancing Quality Scheme Technical Panel to provide members with a seamless offering that promotes the work of residential and commercial solicitors. I welcome feedback on what we can do better – please contact me at email@example.com with your suggestions.