Row of typical English terraced houses in West Hampstead, London with a To Let sign outsideA law firm has kicked-off a class action against residential property conveyancers.  The firms had acted for around 500 people who they say were misled about ground rent conditions when they bought their properties.  Some leasehold purchasers have faced onerous ground rents which double every ten years and restrictions on their ability to purchase the freehold.

Birmingham and Manchester firm, FS Legal, has issued pre-action notification letters to multiple conveyancing firms.  It expects a full protocol letter to be sent to firms before Christmas.

Gareth Fatchett, Solicitor and Partner at FS Legal, said:  “Firms will have a decision to make – whether they accept they have not provided advice to the standard they should have done. If they accept that they have not, the issue is ‘what damage have we caused?’

At the same time the government has consulted on plans to ensure that most new-build properties are freehold and limit leasehold ground rents to £10 a year.  It has been concerned for some time that ground rents are being misused by property developers (see Brunel News, February 2018).

James Brokenshire MP, Secretary of State for Communities, said: “Unfair ground rents can turn a homeowner’s dream into a nightmare by hitting them in the back pocket, and making their property harder to sell.”

“That’s why I’m taking concrete action to protect homeowners and end those unscrupulous leasehold practices that can cost tenants hundreds of pounds.”

James Burgoyne, Director – Claims & Technical, Brunel Professions said, “The government is cracking down on excessive ground rentsBut until new leasehold regulations are brought into force, conveyancers will have to take great care to explain the details of ground rent conditions to their clients.”

“There is a real risk that conveyancers and their professional indemnity insurers will see further claims for negligence from disgruntled property owners if they feel they were not properly advised about ground rents.”

Reports on the class action have been published by the Law Society Gazette and Today’s Conveyancer.  The Ministry of Housing, Communities & Local Government has published a press release with details of its consultation.

Brunel provides a wide range of Professional Indemnity Insurance broking services to property professionals.  Click here to find out more, or call Mark Sommariva on 0203 475 3275.