Harry – Where Are You? First-Time Buyers Need You

Peter Ambrose

Cast your mind back a few weeks when Michael Gove donned a clown-like spinning tie and announced that he was going to get rid of leasehold. Oh how we all laughed. Well, those of us with the briefest knowledge of English property law did. I’m sure quite a few Daily Mail readers were asking, “Why would you buy a ghastly flat anyway – home ownership should be restricted to those that can afford a charming cottage in Amersham with fast commuter links to the City.”

As everyone in property knows, although not in the same bunny-boiler league as technology, leasehold transactions are a bit of a tricky mistress. We are seeing increasing numbers of law firms refusing to do leasehold work due to recent changes from lenders, which is a bit of a problem for first time buyers, especially those who need to get a mortgage. Yes – the vast majority of them. Especially since these law firms are also refusing to do new build work, coinciding with the ending of the “Help to Buy” scheme.

Given that these buyers are the engine of the property market, does this toxic combination mean that D-Ream’s fiscal forecast of “Things can only get better” is even more of a pipe-dream than Tony Blair promised all those years ago?

What’s happened?

Proposing to get rid of leasehold is an easy win for politicians, in much the same way that had William Gladstone promised to get rid of smallpox in Victorian times, he’d have been re-elected on a landslide. Let’s face it, few people wake up one morning and think “What I really really want is to share a badly-converted Edwardian terrace with Airbnb tourists playing Spice Girls tracks all night”. However, the reality of the property market dictates that flats, and even for some poor misadvised souls, houses, are leasehold, with all the problems that go with them.

The legal issues with leasehold are broad and complex; one of the most common questions that agents ask us during our Insights training sessions is why does it seem that every leasehold transaction requires a Deed of Variation. Followed by the inevitable, and why do they take so long. Followed by, how long SHOULD they take? Followed by a deep and resigned sigh when the inevitable answer comes back as “it depends”.

The challenge is that leasehold work involves liaising with many more people; whether its managing agents, freeholders, local authorities, right the way through to Bob the Builder who installed that illegal skylight a few years ago. Given that many lawyers don’t charge the fees necessary to afford to employ the right quality of lawyer to understand the work, pity the first time buyer looking for choice.

The final straw has come with the recent changes to the Building Safety Act, which can be summarized as; if you are trying to buying a flat in a property over 5 floors or 11 metres, then, as Liam Neeson in ‘Taken’ would say, “Good luck”. If you’ve seen the film, you’ll know it didn’t end well. Which is a real problem, because if you have a walk around your town, there are a heck of a lot of these flats around.

How do we fix this?

It’s a tricky one because in much the same way the cladding issues exposed by the Grenfell Tower disaster made thousands of properties unsellable, this issue is not going to be solved overnight. If you take a look at what lawyers are saying online, apart from the usual bleating that paper is really good and technology is really really bad, then it’s not looking encouraging. Faced with significant challenges coming from mortgage lenders, increasing numbers of law firms are just saying “No. And we’re taking our ball home with us, as well”.

Which will mean that choice will be restricted to the few firms that choose to run the gauntlet, probably leading to an increase in pricing and more backlogs. This could have serious implications for chains and timescales, which are already depressingly lengthy.

Whilst there is groundswell opinion for the lenders to change their stance on these properties, this is going to take concerted effort from all sides to address. However, despite the length of time it has taken, we can take heart that the government intervened on the cladding issue, so possibly, maybe it might happen again.

We do know that hoping for help from the government is pure desperation but there’s always a chance that Michael Gove might bump into Harry Potter at Kings Cross and trades his spinning tie for a magic wand – that could work.

Peter Ambrose is founder and MD of conveyancing specialist The Partnership

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