Blog Contribution by Sharon Crossland, founder of www.leaseholdlife.info

HRG is very pleased to add to their blog an article that Sharon Crossland the founder of the excellent website www.leaseholdlife.info has kindly written.

The site is an information resource for leasehold owners, resident management companies and renting tenants. Sharon has written extensively for News on the Block, a publication specifically for flat owners, and has also written a number of articles for hipconsultant.co.uk. She has also been featured in the Observer on the importance of securing a good managing agent. Her experience and current role as acting intermediary between the Directors of her block's RTM company and their managing agent has led to her being accepted by the Institute of Residential Property Management as an Affiliate Member.

ARTICLE

I have been following the unfolding story of HIPs with a great deal of interest and came to the early conclusion that fundamentally they were a sound proposition. They came into the public arena in the guise of Sellers Packs in 1998 and transformed into HIPs in 2006 but their aim remained the same - to improve the conveyancing process. If anyone recalls how AHIPP laid out their stall they will remember that it was pretty well thought out. It's all somewhat irrelevant now though because if the Conservatives get into power at the next General Election they will probably be scrapped, at least in their current guise. The Shadow Housing minister Grant Shapps has made no secret of his hatred of them but he has yet to come up with either an alternative or any ideas on adaptation so where will this leave conveyancing, especially leasehold?

Of the two residential property tenures, freehold and leasehold (I am not including Commonhold because of its pretty non-existent takeup), leasehold has always been the more complicated tenure because of the involvement of additional parties and the complexities of the pre-contract enquiry information. The HIPs (No 2) Regulations broke down leasehold information into two sections – required (mandatory) and authorised (voluntary). There were fourteen questions in the voluntary section which were designed as a 'catch all' provision to allow sellers to disclose all, part or none of it, at their own discretion.
AHIPP were lobbying to get this voluntary information made mandatory and had arranged for the introduction of a Private Members Bill into the House of Lords in 2007. Unfortunately it was not pursued past a second reading due to other priorities at the time.

Sourcing leasehold information from third parties remained problematic in that managing agents were under no obligation to provide it either under the old system or the new and certainly not to a timeframe dictated by the seller. Pricing varied widely between agents as there were no statutory guidelines and a leasehold HIP was proving to be considerably more expensive than that of freehold. So at the beginning of 2009, the only mandatory document required for a leasehold HIP was that of the lease. There was however a new addition to the HIPs pack being worked on - the PIQ (Property Information Questionnaire) which was going to add some mandatory leasehold questions.

There has never been enough information on leasehold tenure provided early enough in the conveyancing process but I personally think that AHIPP have gone further to assist prospective leaseholders than anyone else. The fact that the lease was included as a mandatory document was helpful because buyers don't usually get to see what they have purchased and signed up to. This is due to the fact that the procedural element of assigning the lease is dealt with by the conveyancer, leading to buyers often finding themselves with defective leases (the other main cause of leasehold problems). The PIQ introduced some key mandatory leasehold questions which AHIPP thought was a good start and went some way to addressing the issue of putting leasehold information provision at the front of the conveyancing process, which it did. This issue was further assisted by the inclusion in the pack of the ARMA downloadable leaflet 'Living in Leasehold Flats' ensuring that yet more information would be getting out into the wider domain.

Whilst the issue of leasehold information provision is likely to be raised at a future meeting of AHIPP's legal and leasehold working group, which I hope will again focus on the voluntary information currently contained in the Regulations, the focus for the time being is on the future of HIPs should the Conservative win the general election. That is perfectly understandable but regardless of who wins, the leasehold sector cannot afford to lose this foothold on leasehold information provision. if it does, how on earth is any prospective purchaser going to be able to adhere to the guiding legal principle of buying residential property, that of Caveat Emptor' (buyer beware)?