Leasehold 2018 - Think Tank - Leaseholder Engagement Notes

Topics Covered:

• Government direction (Hackitt review; Commonhold; Residents Association) is for more leaseholder participation – how do we achieve this?

• If we cannot get leaseholders sufficiently involved, what are the alternatives?

• How do we ensure that leaseholders/RTM and RMC directors understand the sector and legislation?"

Background

The think tanks were held under Chatham House rules. A total of 41 people attended and they identified themselves as follows:

• 30% were leaseholders themselves

Occupation wise

• 30% came from block managing agents

• 15% were landlords/developers/RMC director

• 25% were in the legal profession

• 30% were “other”

• 60% felt there was an issue with getting leaseholders involved

Note: The comments below have been grouped by themes for ease of reading. 

Feedback

How do we engage more effectively with leaseholders?

1. Major Works

a. For major works issue a cover note in plain English as S20 tends to be written in legalese.

b. Include any survey results in the s20 to help leaseholders better understand the proposal and hence which contractors could be put forward.

c. One agent said they always add an FAQ, pre-engage on large blocks, publish on a portal (60% sign up by leaseholders), send out S20 letters along with the minutes of meetings held on the matter, define any legal terms, offer a leasehold surgery to discuss, help the leaseholders to form an RTA as a part of the process and deal with the latter.

d. People don’t understand that they can take part in consultations.

2. General engagement

a. It was recognised than non-resident landlords, particularly those overseas, were always difficult to engage on any matter except costs. It is not unusual for buy-to-let landlords to be a significant proportion of the flats, particularly in cities.

b. Apathy was felt to come “from the root” where [people buy a leasehold property without really realising what they have bought).

c. Teach children in school about leasehold – many will end up in flats. This can be combined with other aspects of modern life such as credit cards, mortgages and so forth.

d. In America there is an election process to a condominium, during which all aspects of membership to the community such as service charges and special conditions are discussed.

e. Landlords taking responsibility for helping leaseholders to understand the rules governing their development.

f. A lease is a very intimidating document written for lawyers by lawyers.

g. The lack of permanency in leasehold means that people don’t take the matter as seriously as they need to – it’s seen as a transient accommodation.

h. Hold a welcome meeting every few months for new residents and owners.

i. Create a leasehold handbook for each building giving the rules.

j. RMC’s – after enfranchisement RMCs need to stay engaged with their MA’s whereas they ted to fade away.

k. Does everything need to be on paper? Why not use videos, podcasts etc.

l. Celebrate leasehold and landlords – all of the media news is negative whereas there are many benefits to living in a flat.

m. Don’t be the MA that simply sends out service charge demands – consumers are becoming far more aware and demand more information.

n. Look at a mechanism for joint instruction by landlords and Residents Associations.

o. More information to be available on how easy and cheaply a Residents Association can be formed. FPRA have a good booklet on it.

p. Could commonhold be used as a springboard to change the culture of home ownership.

q. Promote Managing Agents in a more light hearted way to explain what they do. YouTube semi-comical videos – like BA flight safety.

r. How to manage expectations – at home whilst growing up a lightbulb is changed nearly immediately. In a communal setting it could take a week or more.

3. Increasing understanding during the purchase process

a. Charge Estate Agents to give out leasehold information packs explaining what leasehold is and details of the property.

b. The Leasehold information leaflets from IRPM/ARMA/ARHM are too wordy – perhaps look at something more pictorial to attract younger demographic.

c. The Leasehold information leaflets have been produced by IRPM/ARMA/ARHM but don’t appear to be getting to leaseholders.

d. Hold documents such as LPE1 at the Land Registry, open for all to see.

e. The conveyancing mechanism has descended into people going for the cheapest option. This has removed the personal touch where your solicitor would sit you down and talk you through the lease etc. Instead it is all done impersonally and remotely. Providing cheaper services to leaseholders can backfire when value for money is eroded.

f. Make leases less “gobbledegook”. However it was noted that they were legal contracts on high value assets and hence wording needs to be careful. In which case a plain English summary of the lease be drawn up and lodged at the land registry.

g. Have a plain English summary of the lease added to the conveyancing pack.

h. Standardised lease format making it easier to understand, particularly when moving.

i. Upon lease assignment you often just get a copy of the Notice of Transfer as opposed to a fresh copy of the lease itself.

j. LPE1 & LPE2 forms are not being used across the board.

k. The LPE pack generally gets to leaseholders far too late in the sales process, the details such as service charges, ground rents, copy of the lease, three years of accounts etc should be available at point on enquiry e.g. estate agents.

4. How do we ensure that leaseholders/RTM and RMC directors understand the sector and legislation?

a. Directors should be remunerated. It is a thankless task and compensation could help attract more candidates. This may also encourage leaseholders to engage with their Directors along the lines of “I’m paying you so what are you doing about X?”

b. Directors should be required to have a recognised qualification – this need not be onerous and can be online to fit in with their work commitments.

c. Recruitment of Directors is already very hard, with few if any people willing to serve. Increased awareness of liabilities post Grenfell is likely to discourage people further – as is the requirement of a qualification or training.

d. People are so time poor they simply do not want to get engaged as directors or with their Managing Agent.