By Harry Scoffin
Land Registry made moves last week to improve the quality of information available to buyers considering leaseholds, or freeholds blighted by hidden fees and other unfair clauses.
The public body monitoring land and property ownership in England and Wales published its data on all “registered leases” and “restrictive covenants” last Tuesday, which it said was part of a push to unlock its highly valuable information and to spur innovation in the “UK’s burgeoning PropTech space”.
The two new databases, which boast 17 million restrictive “fleecehold” covenants, amongst other key details including date of lease and duration, are free to access for personal use and research purposes, but require an account and acceptance of the terms and conditions.
Dr Andrew Trigg, acting director of digital, data and technology at HM Land Registry, said:
“We’re hugely excited to be in a position to launch these 2 datasets. We know that there’s appetite and utility for this information in property related industries and look forward to seeing how it can positively impact the conveyancing process. Beyond this, we’re intrigued to see what novel innovations find their way out of the UK’s burgeoning PropTech space to make their mark on our digital economy.”
The Land Registry also claimed it would give valuers and planners “a new level of insight on property ownership”.
HM Land Registry backs innovation and transparency with new data releases
HM Land Registry has today (28 July 2020) made available its authoritative data on Registered Leases and Restrictive Covenants across England and Wales. This is part of its ongoing work to improve the availability and accessibility of its data.
The release puts pressure on property portals such as Rightmove and Zoopla, who have been criticised for failing to compel sellers and their agents to disclose tenure and basic lease details when listing properties for purchase.
In January, National Leasehold Campaign co-founder and LKP trustee Katie Kendrick forced Rightmove to publicly acknowledge the issue.
It pledged to “encourage” vendors to be more transparent, but has not matched the rhetoric by revising its policies to change the requirements for Rightmove listings.
The Land Registry’s surprise data-sharing move follows calls by industry and consumer groups for more upfront information to empower consumers and to guard against a repeat of the leasehold and “fleecehold” estate management scandals that entered public consciousness in 2017.
Even leading freeholders want change to the buying and selling process of leaseholds.
Long Harbour managing director Richard Silva, for example, has said that more upfront information on tenure type, ground rent and service charges would be welcomed by the sector. He has recommended that second-hand buyers receive the same amount of information on a leasehold flat as consumers who buy directly from the developer.
ARMA CEO Nigel Glen, who represents managing agents, has also weighed into the debate to say that flat buyers are vulnerable to big and unexpected major works bills because reserve funds are not mandated by law, which could be an item for sellers and their agents to disclose on property portals.
Currently, there is no duty to inform buyers of the level of the reserve fund, if one even exists.
In February, competition watchdog Competition and Markets Authority urged government “improves the quality of information available to consumers early on in the buying process, including about the tenure of the property they are interested in, and the annual cost of ownership”.
The CMA intervention echoed the verdict of the Communities Select Committee, whose report into leasehold property was severely critical of misleading sales practices and claimed there was “a serious crossmarket failure of oversight of sales practices”.
One of its recommendations for government was to introduce a standardised key features document:
“to be provided at the start of the sales process by a developer or estate agent, and which should very clearly outline the tenure of a property, the length of any lease, any ground rent or permission fees, and—where appropriate—a price at which the developer is willing to sell the freehold within six months.”
On leasehold mis-selling, the housing select committee also observed that many leaseholders had not been informed of the material differences between freehold and leasehold ownership at the point of purchase.
Owing to the fact that a leasehold interest provides the consumer with a time-limited right to occupy a property, as with any tenancy, the cross-party group of MPs recommended that the tenure be referred to as “lease-rental” to differentiate such properties from those that come with the freehold.
It suggested that government and others end conflation of leasehold with home ownership.
Interesting article, thanks Harry. It is high time HM Land Registrars owned up to their part in leasehold problems. The present rules for registered conveyancing have caused a lot of the abuses. The built-in lack of care facilitates and encourages dishonest land dealings, (‘Dishonest’ in that they set out to distance the original vendor from its home sales contracts).
The idea that the Proprietorship Register now only records “Lease-Rental” contracts is a relatively new phenomenon, along with the idea that a Term of Years is truly a rental contract in all cases. Leases could still be FREEHOLD before 1926. They very often were, until tax changes in the mid-1800s made freehold leases (for life or lives) less useful. The LPA 1922 was intended to assimilate freehold and leasehold property. For centuries, ultra-long leases had not been regarded as rentals. Periodic tenancies had not emerged before 1789. Woodfall, writing in 1811 for instance (Law of Landlord and Tenant), explained that ‘no man has a lease for 2000 years, as a lease. It is a term that attends the inheritance, Half the lands in the Kingdom are so’.
Conveyancing handbooks from 1959 indicate that service charges were not generally in use in those days or previously. What we see in the modern era is a generally dishonest trend to abuse a consumer market where housing is continually scarce.
It is true that the centuries-old legal fictions of ‘tenure’ make rather a mockery of having a ‘Proprietorship’ Register at all. But we should not so readily assume that freehold and commonhold are the holy grail of reliable ownership. Our homes all belong to the Crown. Whatever form of ‘ownership’ home buyers are allowed, abuses will continue so long as government allows crooked land dealing to continue. It has control, through the Land Registry. Much of the abuse could be halted immediately if registrars, in conjunction with the CMA, exercised proper control over known abuses of consumers.