Widespread Support For Freehold Management Enquiries Form
Industry experts have expressed widespread support for a new Freehold Management Enquiries form (FME1) that is being launched in order to ensure buyers of a property, where a service charge or estate rent is likely to be charged, are fully aware of this fact before the conveyancing process is complete.
Following The Housing, Communities and Local Government Committee’s ‘Leasehold Report’s’ condemnation of leasehold property, it is assumed that the governmental agenda may look to marginalise or ban the leasehold concept in its entirety.
Whilst many have speculated that this may mean the promotion of commonhold property for flats, it is also feared that more developers will look to adopt a managed freehold approach. Here, shared spaces, access ways and gardens may be charged a service fee or ground rent equivalent that new buyers may be unaware of when they purchase their property.
The form will provide clarity on what the buyer will be liable to contribute and the exact prices that will be charged. Full details of any contribution required, who organises the maintenance arrangements for the shared areas, estimated increases to these amounts and who owes what will appear in the report. It is thought that this information will provide the buyer with full transparency and understanding of their obligations before they venture too far down the purchasing process.
Industry experts believe that the FME1 form should be universally embraced in order to create a comprehensive and standardised approach that will ensure a consistency within the reports that will help buyers make informed decisions.
Russell Hewitson, Chair of the Conveyancing and Land Law Committee, Law Society of England & Wales said: “It is good to have so many organisations involved in the production of this form and endorsing this set of enquiries for freehold properties which are subject to service charge payments.
“As it has now been made clear by government that it is looking to developers to sell houses as freehold rather than leasehold this may mean an increase in freehold estates involving charges for services that everyone on the estate shares – such as roads.
“We hope it will be easier for conveyancers and for those answering the questions to have a standard form.”
Beth Rudolf, Director of Delivery at the Conveyancing Association, commented: “With the Government now banning leasehold houses, we believe this is likely to mean a move to more managed freehold schemes with owners who have shared access ways, gardens and amenities. It is therefore vitally important that any prospective purchaser has all the information they require around the nature of their responsibilities, service charges, what this covers, insurances, how disputes are handled, etc, so they are in full possession of all the facts and to ensure there are no surprises for anyone.
“This new FME1 form – created by an industry working together and endorsed by a large number of organisations and trade bodies – is comprehensive and includes a series of standardised questions which will make the whole process that much easier, quicker and more efficient.
“It is a conveyancer’s role to collate all the relevant information to be able to inform the buyer and their lender of matters which might affect the security or intended use and enjoyment of the property, and we would therefore urge all our member firms to use this new FME1. The LPE1 form has been a major success and we anticipate that the FME1 form can achieve the same results.
“This type of collaboration shows the industry can work together and we can achieve some significant milestones and steps forward. We would all like to thank those that have contributed to this piece of work, and believe it will soon become a standard part of the process when purchasing a managed freehold property.”
Paula Higgins, CEO of the HomeOwners Alliance, said: “We fully support the introduction of this new form. It will help future buyers of newly-built freehold properties to understand in advance their responsibilities for shared areas, including communal open spaces, roads and play areas. It will also clarify details of payments, such as service/estate or maintenance charges, for these shared spaces. Being the owner of a freehold property on a newly-built estate is an emerging form of tenure and people are very often not fully aware of all their obligations. The HomeOwners Alliance are pleased that more consistent information will be provided by conveyancing solicitors upfront earlier in the sales process and that the form will be freely available. We will do our best to raise awareness of it and the issues it covers among people buying homes on newly built estates.”
Will this system create a more robust and thorough information source for potential buyers? Will this prevent buyers from purchasing property without a clear understanding of their obligations?