Antonia Adams returns to the frontline team – this month the issue is HIPs…do they deserve all the criticism or do they favour the everyday leaseholder?
There has been a great deal of negative press concerning HIPs and much anecdotal evidence that they are a complete waste of time but I personally believe there is an area in which HIPs could prove to be a valuable asset. Because of the volume of information required for a leasehold pack it was broken down into two sections – required (mandatory) and authorised (voluntary). At the time of writing, the pack must include the lease (required) and may include the other leasehold information detailed in the regulations as ‘authorised’ documents.
These are however, transitional arrangements, and although due to expire at the end of May are likely to be extended to the end of the year with AHIPP currently lobbying to have the leasehold information that is currently ‘authorised’ to be made ’required’.
One of the areas that is currently ‘authorised’ is described by LEASE as: “Information relating to the landlord of the building and any information that might affect the purchaser’s relationship with them, with the same information required for any agent or manager of the building.”
It is vital that this information becomes ‘required’ because while there is plenty of focus on officially required documentation the prospective owner/occupiers not only buys a property but they also buy into the current relationship between the whole development and the existing management parties.
To give an example of the importance of this being made known about at the start, back in 1989 when my partner purchased our flat it was not made known to him by any of the conveyancing parties that leaseholders (including the seller) had withheld their service charges in desperation at the lack of repairs and maintenance being carried out by the landlord and his agents.
Knowledge
This lack of knowledge led to a severe impact on the quality of our lives later on and if he had understood the importance of the state of this relationship he may well not have made the purchase. At the very least he would have been able to make a more informed decision. Nearly twenty years on it would seem evident that this relationship remains little known about at the outset if it is known about at all so how do we bring it to the buyers attention?
If AHIPP succeed in their objectives then the best way to achieve this would be to focus on the information that the estate agent supplies about the property because this is the first person a prospective buyer usually comes into contact with.
If, with the general property specifications there were a tick box attached with the heading of something like ‘current relationship with managing parties – excellent, good, fair or poor’?, this would be a major step toward bringing this still poorly understood relationship to the fore and at the very least start a dialogue.
The agent will have already asked the seller when the property came to market and while it’s highly likely that neither party would be willing to divulge anything that would jeopardise a sale, what is supplied can be investigated further either by the estate agent or by the prospective purchaser.
One of the points that was raised by LEASE was within their Advisory Service Corporate Plan (April 2005 to March 2008) that said: “Leasehold is a substantial but generally little understood market and that there is no reason to believe that leaseholders of new property will be anymore content with the inequalities of the system than other leaseholders and are likely to require advice.”
An inequality that was summed up recently by a leaseholder who quite simply said “while a decision had been made by the LVT in her favour on a particular issue, she didn’t think she had the strength left to get the other party to abide by that decision.”
Code of Practise
The Code of Practice put in place by AHIPP in 2006 provides for free independent redress for consumers but this will not cover this particular area. As the third choice of buying property has failed to significantly materialise, can it still really be acceptable that someone can purchase a leasehold property and then have to spend further time and expense on problem solving and education because they had no idea about even the basics of this relationship? If AHIPP can at least make the divulging of this relationship compulsory then for the first time leaseholders will be supplied with key information that will help determine their long term future, not just the short term position. At the very least it will bring them an awareness of a relationship that will not be readily volunteered by the conveyancing parties as things currently stand.
After all, you don’t expect to have to be a mechanic to own a car do you?
