A south-east law firm has urged the government to take action over the appointment of ‘pet solicitors’ by developers when reforming the leasehold market.
In an early response to the consultation on leasehold reform launched earlier this week, London and Surrey firm Hart Brown says such solicitors lack independence because they are reliant on the developer for referrals.
Use of ‘pet solicitors’ is one of five reforms suggested by Hart Brown in the response, which is attributed to Emily Fitzpatrick, head of leasehold enfranchisement and David Knapp, head of residential property.
‘Building Developers insist on or encourage the use of a “pet solicitor” to handle the purchase for the buyer,’ they say. ‘This solicitor is usually fairly inexpensive (sometimes even paid for by the developer) but is unlikely to be truly independent.
‘Many of our clients have complained that they were not properly made aware that they were buying a leasehold house or of the potential costs of acquiring the freehold at a later date. An independent solicitor has no relationship with the developer and is not dependent on the developer’s referrals for business.’
A spokesperson for the Law Society said: ’A solicitor’s duty to their client is at the heart of the relationship we have, to respect their confidences and advance their best interests.
’If a solicitor is proven to have deliberately provided advice that did not serve the best interests of their client, they should face serious disciplinary action.’
Other suggestions from Hart Brown include restricting developers reserving future income from leases. With retirement flats in particular, some developers require leaseholders to pay the landlord 1% of the value of the property (or sale price) on any sale.
The firm also suggests:
- regulation of managing agents to prevent the abuse of service charges;
- a right of first refusal to ensure developers or landlords offer the freehold for sale to their leaseholders before selling to a third party; and
- A statutory right for freeholders or leaseholders on an estate where an estate service charge is payable to take over the management of the estate, similar to the statutory right to manage which is only available to leaseholders of flats.