An IT blogger has come up with a design which effectively incorporates tenure terms in Rightmove listings.
IT professional and blogger Peter Ellis Jones said the mock-up reflects what listings might look like if the portal were “more aligned with buyers”.
The sample uses a grey box at the top of the property descriptions to give out ‘wealth warnings’ about tenure terms and what leasehold ownership means, the lease length, and any ground rent or service charges.
Rightmove has been asked for comment.
And for Freehold:
Tenure: Freehold
You own the property and it’s your personal responsibility to deal with all repairs, maintenance and cleaning. If you ignore these factors it may impact future resale value.
Lease: No lease but see above under tenure. Not all freeholds are equal – some have conditions and potentially onerous obligations often called Covenants. Check with your conveyancer about the property you intend buying.
Ground Rent: No ground rent but the local authority will feel it necessary to increase council tax on a regular basis – often above the rate of inflation. Note: this will also apply to Leasehold homes.
Service Charge: No service charge but see notes under Tenure.
Reserve Fund Charge: No RF charge but see notes under Tenure. It will be sensible to save some money for occasional running repairs.
How far do we go with this? We should never hide the facts about a property but getting into offering advice about the legal implications is straying into the legal professions remit. My ‘Freehold’ comments would need to be there too otherwise we’d be accused of bias against perfectly reasonable leases. How do you operate a block of flats without a lease? People doing their own thing just wouldn’t work. What’s wrong is ‘bad’ leases but we seem to be going about this in the same way that tenant fees were dealt with. Some overcharged (bad), some didn’t (OK) but legislation hits everyone rather than sorting out the wrongdoers.
Who is going to decide how much information should be provided upfront? The Ombudsman gets around it by using such general terms that whatever you didn’t put in the particulars makes you liable.
Bring back HIPS?
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All for providing the facts but as David Clark has eloquently put – does it really need a “health warning” in addition on every point?
Caveat Emptor may not be dead but is terminally ill and agents need to be more open and transparent on facts but where do you draw the line?
We still need to credit buyers with some intelligence and they should certainly take professional advice.
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And for freehold flats: “This property is virtually unmortgageable and its value greatly diminished because it is almost impossible to enforce covenants on horizontally divided, freehold properties. Advice: Buy a leasehold one”!
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Caveat emptor died with the Consumer Protection Regulations 2008.
I think you’ve just shot yourself accurately in the foot. If you are arguing that providing accurate information on a lease impedes sales (and those example statements are accurate for many leaseholds) then you have confirmed the information is ‘material information’ that would affect the ‘transactional decision’ of the consumer. You’ve just busted your own argument.
National Trading Standards Estate Agency Team have issued consumer guidance confirming lease information is material information. Given policing this simply means checking if lease information is in the property details, I imagine prosecutions will be coming soon.
I wouldn’t be waiting for Rightmove to make special data fields ready, I’d be putting the information in the description now, before RM come up with a system that splatters warnings all over the place. As ever, if you don’t get ahead and put the consumer first, then being dragged to the table of compliance by force usually ends up a more painful experience.
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The consumer has far more protection when buying a kettle or fridge compared to buying a house or flat. When taking out a mortgage, the terms are clearly spelt out, for example your property is at risk for non payment, the interest rate and so on.
Leasehold properties in particular are shrouded in mystery with terms buried in a lease document, written in such a way that Charles Dickens would be proud of. An expert solicitor is usually needed at some expense to the buyer to translate these documents.
The consumer deserves far better. The advertisement can easily state tenure type, lease length, the ground rent and increasing terms, the current service charge, permission fees, names of the freeholder and managing agent. Much more can be presented in a way the average consumer understands. The conveyancing solicitor can verify the information.
Estate agents and advertisers are failing consumers and shooting themselves in the foot if further into the transaction the buyer discovers onerous terms in the contract, when much time and money could be saved by being honest and upfront in the first place.
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that’s what buyers pay their solicitors to advise them surely ?
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Why should buyers have to pay a lot of money to find out information that can easily be presented at the outset ? The solicitor can verify this information and other details during conveyancing.
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Even listing all this information potentially leaves other material information out. A lease can be drafted any way you want and clauses can be ambiguous and/or confusing, sometimes deliberately so and any expert will tell you that a lease has to be considered as a whole. There may well be an ambiguous clause in one section and a clause somewhere else that clears up the ambiguity.
One lease I’ve seen has a very ambiguous landlord obligation to provide communal heating and you have to go searching round for how the service charges are apportioned between the flats.
This is the ground rent clause from one leasehold agreement that I’ve seen “PROVIDED ALWAYS that if on 25th March in each year of the New Term as specified in paragraph 12 of the Particulars the annual rent does not exceed two thirds of the Rentable Value of the Premises the Tenant shall be required to pay such annual rent as shall be £1 less than two thirds of the Rentable Value of the Premsies and PROVIDED FURTHER that if the Lessor as specified in paragraph 8 of the Particulars and the Tenant as specified in paragraph 9 of the Particulars cannot agree the computation of the annual rent within 14 days of each new Payment Date then the matter may be determined by a surveyor appointed by the Lessor who’s decision shall be final and binding on both parties”
The leaseholder paid the freeholder £7000 to remove that clause and even after that he was left with a doubling ground rent clause.
The only solution is get hold of a copy of the lease and attach it to the listing with a recommendation to take legal advice.
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The clause you describe above should be struck out as an unfair contract term, certainly for new leases.
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Hi Kingsroad,
I made the mockup shown in the article. For the case where lease terms are unusual, complex or unknown (perhaps because the seller hasn’t provided a copy yet) we might be able to borrow the idea of “sophisticated investors” from finance industry regulation.
An agent could mark a property as for “sophisticated buyers only” which would exempt it from all lease-related information requirements and statutory warnings, with the exception of a general warning to the effect of: “This is a leasehold property with unusual, complex or unknown lease terms and is therefore only suitable for professional landlords or other property industry experts” — what do you think?
cheers,
Pete
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