Law Commission publishes progress report on event fees

Thursday 14 July 2016

On 28 June 2016 the Law Commission of England and Wales published a progress report on their work relating to the issue of event fees. The progress report sets out the Law Commission’s initial policy conclusions and recommends next steps to address problems in this area.

Event fees are common in specialist housing for older people because older people who often buy a leasehold retirement flat often have to pay more than just the purchase price. When the property is sold, they may be require to pay between 1% and 30% of the resale value to the company that built and/or manages the property. These fees can be triggered by other events, such as sub-letting – so they are known as “event fees”.

The Law Commission has concluded that event fees can benefit consumers but they must be disclosed to prospective buyers early, clearly and prominently. They say there is need for greater transparency and propose the following recommendations:

1. More guidance should be given to estate agents on their existing legal obligation to disclose event fees in any communication to prospective buyers that mentions the price of the property.

2. The industry should work with the Law Commission to create a single set of Department for Communities and Local Government (DCLG) approved Code of Practice provisions relating to event fees.

3. If the rules are broken, the event fee should not be payable.

4. Event fees that are solely for the maintenance, repair, or improvement of the estate should be subject to a statutory trust.

The Law Commission’s work is split into two stages. The first stage aims to help protect purchasers and they want to have the guidance for estate agents and code of practice in place by April 2017. If DCLG accept the Law Commission’s recommendations the second stage would involve the drafting of a Bill during the 2017-2018 financial year to bring in a statutory trust and amend unfair terms law.

NAEA is working with a number of stakeholders on this issue and will keep members up-to-date as developments unfold.

The progress report can be read in full here