It stands to reason that new buyers and their solicitors want to know about a block’s management and finances before signing a new lease. The new Leasehold and Freehold Reform Act 2024 is set to make getting this information easier– but not just yet.

While leaseholders who are selling should already be aware of how the building is managed, have copies of the latest accounts, and know whether any major works are planned, etc, much of the detailed information will be held by management companies, agents, or freeholders who are asked to answer conveyancing solicitors’ enquiries. Fees from them may range between £100 and £500 for preparing a completed Leasehold Property Enquiries form (LPE1) and are fairly typical, these are generally paid by the seller of the flat.

Sadly, there is currently no legal obligation for freeholders or agents to respond, nor is there a time limit on the freeholder or their agents to complete an LPE form.  Yet it is key information that will affect a buyer’s decision on whether to go ahead or not and at what price, and delays could hold up or even cause a sale to be lost.

This should be fixed by the Leasehold and Freehold Reform Act 2024  which aims to make buying or selling a leasehold property quicker and easier by setting a maximum time and fee for providing this vital home buying and selling information.

What the changes will be, beyond controls on fees is still unknown, as the Act is primary legislation, and its provisions will come into effect piecemeal as secondary legislation (Statutory Instruments or SIs) is published. The good news is that SIs, which are detailed regulations, don’t have to go through Parliamentary scrutiny like primary legislation, and we do know from the King’s Speech of July 2024 that the new government is keen to enforce the 2024 Act in full as soon as possible (it is already consulting on more leasehold reform). It has been suggested that 2025-2028 is the window we can expect for all of the 2024 Act to be in full force.

What Leasehold Property Enquiries must be answered?

The standard LPE1 form is for collecting information about, for example, ground rent, insurance, and service charges. The latest revision was published in January 2023 and is said to be easier to complete.

It also provided an opportunity to add new questions on the deed of covenant (the agreement to abode by the lease terms), fire safety, buildings insurance, more detail on service charges, and those old chestnuts of pets and parking which can cause so much unpleasantness in a block if not made clear at the outset.

The LPE form will also ask who manages the building, who collects rent, and charges if any major works on the horizon could land a new owner with a big bill. It will also ask if there are arrears on the flat or disputes with other leaseholders or third parties.

You can Download an LPE1 form (PDF) here.

One of the first things a conveyancer will ask for is a copy of the lease, which all leaseholders should have. If not, you can ask for a freeholder or managing agent for a copy but expect them to charge you for administration and photocopying.

You can also get a copy of your lease from the Land Registry .

The Find Property information (FPI) service lets you download a summary of information about a property including the address, title number, current owner’s name and address, what they paid for the property, whether it is freehold or leasehold, if there is a mortgage on the property and the lender’s contact details.

Your conveyancer will also need you to provide proof of identity, property title deeds (which they or you can easily get from the Land Registry), and to complete forms detailing fittings and contents and general property information, which are usually in a standard Law Society format.

Service Charges

Conveyances will ask a lot about service charges and while that detail will be provided by whoever completes the LPE1, leaseholders really ought to have a good idea of the finances for the block that they are paying for.  After all, allegations of overcharging are rife and have been one of the key drivers for leasehold reform.

Accounts can be difficult to interpret and itemised in ways that may not make sense to leaseholders. That’s why another welcome part of the 2024 Act is a promise to give leaseholders greater transparency over their service charges by making freeholders or managing agents issue bills in a standardised format that can be more easily scrutinised and challenged. There will be a requirement to produce a year-end report with details of planned major works.

Again, the devil will be in the details, but it’s a wake-up call if your approach to record-keeping has been a bit relaxed because, perhaps, you are a friendly, leaseholder-owned and/or self-managed block that never has problems. You will be affected by these new regulations as well and will need to comply.

As always, where there is a residents’ management company, the onus is on the company and its directors to keep up with the law. Undoubtedly directors do their best, but mistakes happen so make sure your insurance package includes liability cover to protect everyone in the block from any losses caused by inadvertent errors.

Find out more about management company liability cover and residential leasehold buildings insurance.

You can find out more about what the Leasehold and Freehold Reform Act 2024 (LAFRA) has in store here.

Disclaimer:

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

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