CILEx lawyers warn leasehold reform will be ‘undermined’ if it fails to tackle managing agents

21 November 2018

CILEx lawyers warn leasehold reform will be ‘undermined’ if it fails to tackle managing agents                                                                                                                                                                                                                

The Chartered Institute of Legal Executives (CILEx) has told the government that its proposed plans for leasehold reform will be undermined unless they regulate managing agents.

Responding to the government’s latest consultation to reform the home buying process which closes this week, CILEx surveyed its conveyancing specialist reference group drawn from its 5,600 members working in conveyancing, out of a total membership of 20,000.

CILEx is calling for systemic changes to the market to rebalance the equality of arms between landlords and leaseholders to fix the ‘broken market’. It says that crucial to the success of leasehold reform will be greater regulation of managing agents, and strengthened redress mechanisms for leaseholders.

In its response, the professional body points to the ‘excessive or unreasonable fees’ being charged by landlords and managing agents in the form of service charges and administration costs. It also highlighted anecdotal evidence from its members regarding shared-ownership leases which points to unreasonable costs being charged for work involved in staircasing – where a tenant gradually acquires more ownership of the property.

Simon Garrod, Director of Policy and Governance at CILEx, says: “Without further regulation and adequate redress mechanisms in place, the government’s plans to reform the home buying process for consumers will be undermined. In particular, it is essential that there are added protections and greater transparency around administration and service charges for leaseholders.”

Further, CILEx members also believe that managing agents and freeholders should be required by law to respond to requests for leasehold information within 10 working days and that a maximum fee of £100 should apply for doing so.

Almost all CILEx members were in favour of ground rents that begin, and remain at, a peppercorn level, and were therefore fully in support of the government’s proposals for a £10 cap. Yet it warned of the risk of developers seeking to replace lost revenue streams following implementation of any cap.  

Members were also in favour of better protection for residential long leases, in the form of an extended original term, with members saying leases should be granted on 999-year terms.

The professional body is also calling for greater clarity around government priorities in relation to leaseholder reform to help legal practitioners and consumers better prepare. Its members cited top priority areas as: raising consumer awareness, protecting vulnerable leaseholders from repossession, and regulation of estate and managing agents.

CILEx’s full response to the consultation can be read here.

ENDS

For further information, please contact:

Kerry Jack, Black Letter Communications on 07525 756 599 or email:

kerry.jack@blacklettercommunications.co.uk

Louise Eckersley, Black Letter Communications on 0203 567 1208  or email:

louise.eckersley@blacklettercommunications.co.uk

Notes to Editors:

The Chartered Institute of Legal Executives (CILEx) is one of the three main professional bodies covering the legal profession in England and Wales. The 20,000-strong membership is made up of Chartered Legal Executives, paralegals and other legal professionals.

CILEx members are regulated through an independent body, CILEx Regulation. It is the only regulator covering paralegals.

CILEx provides training, with qualifications open to those holding GCSEs, A levels or a degree. Over 100,000 students have chosen CILEx over the last 25 years, with the majority studying whilst in full or part-time employment.

CILEx provides a non-graduate route to qualification as a lawyer, although graduates are also welcomed and the Graduate Fast-track Diploma offers a more affordable and viable alternative to the LPC.

Those who complete the full CILEx qualification are known as Chartered Legal Executives. They can become partners in law firms, coroners, judges or advocates in open court.

The membership is diverse – 75% of members are women and 11% are from a BAME background.