A new process will knock as much as two weeks off completion times on the conveyancing of flats. A major cause of delay when selling flats or any other leasehold properties is the time it takes to get necessary information from the building owner or manager.
This information is vital for buyers and their solicitors, but property sales are frequently delayed for weeks while waiting for replies to enquiries.
One of the reasons for this has been that there has been no standard format for obtaining this information. Individual law firms have produced their own forms of enquiries which varied widely. Freeholders and building managers then had to deal with each set of enquiries on an individual basis.
Standard questionnaire will reduce conveyancing delays when selling flats
To alleviate this cause of delay a new standard questionnaire (Form LPE1) has just been introduced. It will capture in a single format the information about a flat which is held by freeholders and managing agents – for example, information about ground rent, buildings insurance and service charges – and which is required by buyers.
It is intended that building managers will now be able to set up IT systems so that the replies to the enquiries can be generated quickly and reduce delays in the sale process.
Buyers and their solicitors will benefit from the new form as it should save delays in getting replies. Because it is very comprehensive buyers’ solicitors should not need to raise any additional enquiries except in exceptional cases.
As all the necessary information will be received in a standardised and consistent format it will then be easier for solicitors to advise buyers.
It will not be mandatory for solicitors and other conveyancing firms to use the form, nor for freeholders to reply to the enquiries on the form. However it is hoped that solicitors will get quicker answers by using it especially when dealing with the larger firms of managing agents.
Selling and buying flats will now be a quicker process
Because sellers’ solicitors can now apply for the necessary information at the start of a conveyancing transaction the time it takes to complete sales will be reduced. They will no longer have to wait for the buyer’s solicitors to submit their own form of enquiries which then has to be forwarded to the management company.
Law Society deputy vice-president Jonathan Smithers said:
‘Having a standardised format will be advantageous to sellers, buyers, solicitors and conveyancers dealing with leasehold property.
‘It will not only bring clarity to the part of the procedure that deals with obtaining necessary leasehold information but may also clarify some issues relating to time and cost. It will also mean that everyone becomes familiar with one form, inevitably making the process more cohesive.
‘The Law Society will make every effort to secure the support of key stakeholders, including the government, to make this scheme a success. ‘
IT systems will help provide quicker response from building managers
Building owners and managers are also being encouraged to develop systems so that they can quickly generate replies to the new form. Major commercial agents and managers will no doubt feel this will be a worthwhile investment which will save them time and money when dealing with such enquiries, as well as benefiting flat-owners.
One would like to think that the local councils and housing associations which own and manage many blocks of flats will also welcome the new form and adapt to its use.
But it is probably too much to hope that every freeholder or building manager will follow suit. Many blocks of flats are owned or managed by individuals or small companies. They are less likely to see the need to invest in any new system or indeed may not be aware of the existence of the new standard form.
This is especially likely to be the case when the freehold of a block of flats is owned by the flat-owners themselves and there is no effective management of the building.
The new form has been developed following joint collaboration between many professional bodies and organisations across the property industry including The Law Society, The Society of Licensed Conveyancers, The British Property Federation (BPF), The Royal Institution of Chartered Surveyors (RICS), The Association of Residential Managing Agents (ARMA), The Association of Residential Letting Agents (ARLA) and The National Association of Estate Agents (NAEA). The overall concept has also been supported by The Council of Mortgage Lenders (CML) and The Building Societies Association (BSA).
Why no standard fee for replies to new form?
With this level of co-operation across the industry it is a pity that the opportunity was not taken to agree a standard fee for providing the information required in the form. At present fees vary widely so sellers’ solicitors have to ask the building manager each time how much their fee is for dealing with enquiries. They then have to ask their client for payment and forward it on before the manager will take further action.
If there was a standard fee payable solicitors could collect it when taking instructions from sellers and forward payment with the enquiry form – this in itself would save several days on a sale.
How sellers can help speed up their property sale
To avoid this delay flat-owners are encouraged to contact their building manager at the time they put the flat on the market to ask how much they charge for replying to the enquiry form. They can then put their solicitor in funds enabling them to send payment together with the form immediately a buyer has been found.
In some cases sellers may find it advantageous to pay for and get the replies to the enquiries even before they have got a buyer. This will save delay when a buyer is found as the seller’s solicitor can then send all the necessary information to the buyer’s solicitor at the same time as the contract package.
However this should only be done when there is a good prospect of finding a buyer quickly since buyers’ solicitors expect the management information to be reasonably up-to-date.
Applying for management information in advance is also recommended when selling a flat by auction. Although sellers will have to pay for the information pack with no guarantee of a sale, prospective buyers are often put off if no such information is available. This can lead to the property failing to reach its reserve or selling for a lower price than might otherwise have been achieved.