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Why have leasehold Packs been watered down?

When Home Information Packs were first introduced under the Housing Act 2004 it was envisaged that Home Information Packs for Leasehold properties in particular would dramatically speed up the conveyancing process.  

It has long been held opinion of the cognoscenti of the conveyancing world who specialise in leasehold transactions that when it comes to selling or buying a leasehold property, the management information more than any other part of the process holds up a conveyancing transaction.

Although not verbalised most leasehold conveyancers would acknowledge that leasehold Home Information Packs could have and should have dramatically speeded up leasehold conveyancing given that the legislation originally envisaged management information to a compulsory part of the packs.

In the years that have elapsed since the introduction of Home Information Packs a requirement for leasehold information has been eroded to such an extent that the only compulsory leasehold document to be contained within an information pack is in fact a copy of the lease, and even that document does not need to be available at the point of marketing the property.   This begs the question, why has leasehold information slowly but surely been diluted.  

The truth is that one can only speculate as to the answer as the government have not given definitive reasons behind their logic.   This article seeks to suggest a number of possible reasons which may or may not be accurate:

A. The legal industry including lawyers and conveyancers have simply not taken up the opportunity of dominating the Home Information Pack industry.   As such a whole new industry has been spawned without inherent deep legal experience and expertise.

Perhaps the government anticipated the Home Information Packs be produced by conveyancing solicitors and conveyancing lawyers who would be familiar with how to obtain management information, after all, they have been obtaining this information for years as part of the conveyancing process.   A Home Information Pack was simply bringing that process forward.

After Home Information Packs became reality it became apparent that the Home Information Pack industry was made up primarily by companies with strong administrative and technology platforms but not entirely blessed with significant conveyancing experience, especially in the field of leasehold transactions.  
In light of this the government may have become concerned that delays caused by collating Home Information Packs for leasehold properties would in fact delay transactions as opposed to speed up transactions.  
Evidence of the Home Information Pack industry’s lack of confidence in obtaining leasehold information was evidenced by a number of preliminary agreements that were in place between Home Information Packs and solicitors whereby Home Information Pack providers outsource the collation of leasehold information from law firms.  

B. The introduction of compulsory requirements of leasehold information in Home Information Packs coincided with the collapse of the housing market. Government officials may well have been concerned about the likely costs of obtaining management information (which can be as high as £1, 000) which in turn would be prohibitively expensive for sellers to pay up front.   There is currently no regulation that caps the amount of fees that a managing agent or landlord can charge for providing detailed leasehold information which is generally speaking not in the hands of most leaseholders.   Whilst a seller can potentially challenge the cost of the management information through a Leasehold Valuation Tribunal such processes will always be too slow and complicated and essentially the managing agent ultimately does have a gun to the head of the leaseholder or seller.   It was pointed out to the government that there was no legislative requirement for the landlord or managing agent to provide all the required leasehold documentation and information within a specific period of time.   If specific leasehold information was required before a property could be marketed this could dramatically penalise a seller and impact the leasehold housing market.  

C. There were concerns that in making leasehold information a required part of the Home Information Pack one would be giving the landlord or managing agent their leverage against the leaseholder in terms of stating that they would not provide the information unless the service charge and ground rent was paid up to date.   This is the scene as some conveyancers see this as a practice generally when trying to obtaining management information for the conveyancing process for a seller.

D. In an environment where there is a lot of negative equity and increasing repossessions having the additional costs associated with a Leasehold Information Pack could result in a seller being forced out of being able to market their property.

E. There is a suggestion that the leasehold information that would be required to meet the leasehold Home Information Pack requirements would have had a limited shelf life and been requested once again by the buyer’s conveyancer.   This has of course been an issue with out of date  Local Authority Searches provided within the Home Information Pack.

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