Warren Gordon looks at some key changes affecting property practitioners, including the government’s plans to reform leasehold
The election has been won and Brexit has happened, although some of the finer details need attention! The government is now turning its attention to domestic priorities, and property features prominently on its to-do list.
The government’s objective to make the residential leasehold system fairer for tenants has led to a number of consultations, including a recent Law Commission consultation on leasehold enfranchisement.
The Law Society wants the residential leasehold system to operate fairly for tenants and not to cause delays in the homebuying process.
High and escalating ground rents, unclear and excessive service charges, and unexpected and onerous fees of managing agents for permissions have led the government to act. The Law Society agrees that ground rents should be abolished or have a low, transparent rate, and permission fees should only be payable where reasonable. More information should be provided at the start of the sales process about the specifics of a lease being bought.
Solicitors should bear this in mind when advising on leasehold-related transactions. The Law Society’s guide “Buying and owning a leasehold home” may assist clients.
The government considers that commonhold is potentially the answer to some residential leasehold concerns. The profession will be somewhat sceptical based on past experiences of commonhold, but the Law Society is supportive of looking at ways to reinvigorate commonhold.
Over the coming year, the Property Section’s events, articles and webinars will explore the implications of these significant changes for you, our members.
Before signing off, I want to highlight a few new releases from the Law Society. Its practice notes on contaminated land and flood risk were both updated in January, and you are encouraged to consult them to understand your duties.
Following the well-known Brabners decision, the VAT treatment of disbursements practice note has also been updated and relaunched as guidance. The key point is that where you use a search result to provide advice to a client, HM Revenue and Customs may argue that this is a VAT supply and the cost must be treated as a charge for your services and subject to VAT, rather than treated as a disbursement. Many firms will take a conservative approach to classifying items as a disbursement.