Our response to Law Commission's consultation on residential leases

Friday 29 January 2016

Following on from last week's newsletter where we raised awareness on 'event fees', we're pleased to announce that we have now submitted our official response to the Law Commission's consultation on Transfer of Title and Change of Occupancy Fees in Leaseholds.

The proposals call for the introduction of stringent codes of practice to require developers, operators and managing agents to bring ‘event’ fees to the attention of prospective buyers. 

Event fees, also known as ‘transfer fees’, ‘contingency fees’ or deferred ‘management fees’ are the money some residential leases require the leaseholder to pay on the sale of the property or other event.

The fees are common in specialist housing for older people. For instance, when someone moves to retirement housing residents can make use of services provided for the accommodation. These can include use of the residents’ lounge, a gardener, or access to 24-hour care.

For more background information, please refer to our previous article.

After public dissatisfaction at how some of these fees were used, the Office of Fair Trading investigated. Its 2013 report concluded that some terms were potentially unfair contract terms, but there was “a lack of clarity in the legal framework”: consideration should be given to legislative reform. In September 2014, the Department for Communities and Local Government asked the Law Commission to look at the problem, the law and possible solutions.

In October 2015 the Law Commission opened a consultation on residential leases looking at fees on transfer of title, change of occupancy and other events.

The Law Commission also produced a VIDEO outlining how owners of retirement flats and bungalows, and their families, are being caught out by unexpected charges hidden in leases. 

We submitted our response on this important topic for estate agents last week, calling for greater clarity around the issue .You can read it below.