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Hannah Gannagé-Stewart

Deputy Editor, Solicitors Journal

Form with function: using a consistent 'key features' document

Form with function: using a consistent 'key features' document


A new form designed and endorsed by property specialist bodies is already addressing concerns around leasehold and supporting a move to managed freehold, says Beth Rudolf

Securing real change in the property market can often take time and it certainly needs cooperation and coordination.

There are many stakeholders and vested interests, and the whole house purchase process involves so many different professions that, without agreement between all parties and a commitment to work for the betterment of the market, there is little chance of achieving much. 

Last month I wrote about why we should support changes to and a greater take-up of commonhold. 

In this regard, the Housing Communities and Local Government (HCLG) Committee’s own report makes a positive contribution.

The report specifically focuses on the plight of existing leasehold house owners, how they might be able to extricate themselves from such a situation, and how the government should go about reforming the process.

Fixing the leasehold headache

There are several suggestions directed at the government in the report, including a Competition and Markets Authority (CMA) investigation into mis-selling claims in the leasehold new-build home sector, with a view to providing compensation to those affected. 

It also invites the government to focus on a significant number of areas in these leases such as onerous ground rents, service charges, one-off bills, unfair permission charges, the system for resolving disputes, advisory services, plus unreasonable costs in order to extend leases.

Another recommendation suggests the introduction of a ‘key features’ document, which would be provided to potential purchasers at the start of the process and would include all the required information to allow these individuals to make upfront decisions before putting in an offer.

And there is a renewed call to move to commonhold across the UK as a way to replace leasehold.

It is difficult to disagree with the report’s findings and with its suggestions for moving things forward.

This will be particularly important for leaseholders who might well believe they have been overlooked until now and who have been so vocal in the campaigning for change.

The committee’s focus on providing solutions to those currently ‘stuck’ in their leases is most welcome, suggesting it should be “legally possible” for the government to introduce the necessary legislation to remove those onerous grounds rents.

The suggestion is that they should be limited to 0.1 per cent of the present value of the property, up to a maximum of £250 per year, while any new leases should have their ground rent set at a peppercorn level – zero financial value. 

This would be a significant step forward and to have an influential parliamentary committee supporting much of what the industry itself has been recommending sends a very strong signal to government and through the sector. 

It is of course now up to the government to deliver on this and we should perhaps all hope that this is not pushed into the proverbial long grass at a time when the government might be able to say that it has more important things on its mind. 

Shared outcome 

Cross-party consensus might not be all the rage in parliament – although by the time you read this, that may be very different – but in our industry this approach is not just alive and well, but in full effect.

For instance, as part of the discussions around the changes to the leasehold system and the move towards commonhold, the Conveyancing Association has been working with 13 other trade and representative bodies to produce a new Freehold Management Enquiries (FME1) form that will be used by conveyancers to secure the necessary information for a property which is being sold as a managed freehold. 

Following the government ban on the sale of new leasehold homes, the association’s belief is that we’ll see many more properties move towards a managed freehold status where owners have shared access ways, gardens and amenities.

Again, coming back to the need for much more upfront provision of information to prospective purchasers, most stakeholders believe that a standardised questionnaire – which the FME1 form is – allows all that detail to be captured upfront. 

The form will cover the nature of an owner’s responsibilities, service charges, what is covered, how disputes are resolved, and all other matters pertaining to that managed freehold property.

You’ll see a distinct likeness to the information being requested by the HCLG committee in its call for a leasehold ‘key features’ document, and the FME1 form will likely fulfil that role for properties in this jurisdiction.

What is perhaps most compelling about the introduction of the form is the buy-in that has taken place from across the entire industry.

There are too many organisations to mention here but, in addition to the Conveyancing Association, this is endorsed by ARLA, ARMA, the Law Society, the Leaseholder Association, the NAEA, RICS and the Society of Licensed Conveyancers.

All these organisations, and others, have signed a memorandum of understanding to the effect they jointly hold copyright to the document and have agreed to make it available for free to those who wish to use it. 

Standardised questions 

The entire industry recognises the importance of such a document and that it should be used in its entirety, which means those who do use it cannot alter the questions or the format.

There is little point in it if we allow only the partial collation of information, because the likelihood is that this will merely cause further delay to the process and will result in the individual potential purchaser not being in full possession of the facts before they make decision.

And that is where serious problems can lie. From our perspective, conveyancers will be at the forefront of this change, driving the use of the form because it is their role to collate all the relevant information to be able to inform the buyer and their lender of the matters which might affect the security or intended use and enjoyment of the property. 

This is why we are urging all our members to use it, because it is comprehensive and the standardised questions will make the process of securing that information far easier, quicker and more efficient. 

Again, these types of initiatives are only possible because of the buy-in from the variety of stakeholders and representative bodies that make up our industry.

In many areas we are able to speak with a unified voice and, rather importantly, come up with the solutions that are required to make the process far better.

This is a very important milestone for the industry and means that the likelihood of confusion around whether the question has been asked and the correct information received, can be finally put to bed.

It should hopefully become a standard part of the process when purchasing a managed freehold property and is another signal to those in positions of power that a united industry can help deliver the changes we all want to see.

Beth Rudolf is director of delivery at the Conveyancing Association

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