High legal costs are stopping leaseholders pursuing freeholders through the tribunal, according to Labour, which has today unveiled a plan to end 'unfairness and injustice' in the leasehold system.
The opposition party makes five key pledges in its report, Ending the Scandal: Labour's new deal for leaseholders. These include ending the sale of new private houses and flats, ending ground rents for new homes and capping the ground rent for existing leaseholders, and cracking down on unfair fees and contract terms.
The report says little about the conveyancing process. However, it highlights the 'open-ended' legal fees that can be passed on to leaseholders through service charges if a tribunal finds in the freeholder's favour or, in some cases, if the leaseholder wins.
It mentions a case from last year where a leaseholder successfully challenged part of his service charge bill in court. The management company was ordered to reduce the bill by £1,200. However, Labour says the management company subsequently charged its £61,000 legal fees back to the leaseholder. 'The imbalance of interests in the tribunal system dissuades leaseholders from pursuing claims and has even led to solicitors warning leaseholders not to use tribunals', the report says.
Labour asks if there should be a new route for redress for leaseholders suffering from unreasonable costs and conditions. It seeks responses to 11 consultation questions by 30 September, five days after its party conference ends.
The Conveyancing Association, a trade body, welcomed today's 'robust' proposals. Beth Rudolf, director of delivery, said the report confirms that leasehold reform 'is a cross-party issue and one which will not go away'.
Last week the government unveiled measures to crack down on unfair leasehold practices, though steered clear of scapegoating solicitors after concerns were raised about some conveyancers' relationships with developers.
The government wants to introduce a 15-day deadline for managing agents and freeholders to provide leasehold information when properties are sold, a move that was welcomed by the Law Society.
Society president Simon Davis said: 'Conveyancing solicitors are usually involved at a much later stage, by which time clients may have already emotionally committed to the purchase - and may be less open to hearing advice about onerous conditions. This can make it much more difficult to advise. A time limit of 15 working days for developers and estate agents to provide the necessary information is therefore entirely appropriate and to be welcomed.'