Selling your Flat

If you want to sell then you will almost certainly require a ‘Management Pack’ which is a list of documents and information described in a document called LPE1. That data is compiled by Haward and costs £100 at present. Our view is that you are entitled to this information at a fair price and promptly. That’s what we try to achieve and if you have the inclination Haward has also written on this issue and here is an extract from that article:

In almost every case a long leaseholder selling their leasehold interest will have to provide the seller with what is known in the industry as a ‘management pack’. These packs contain information about the property and about property management and the relationship between the parties to the lease. Of around 1,500,000 property sales each year around 15-20% are of flats, meaning 225-300,000 flat sales. The unusual features of management packs are: –

• The only entity or person who can create at least parts of the pack is the freeholder since any incoming tenant will have to know the position in respect of disputes, service charges and ground rent.
• Almost all the documents required have been created by the freeholder or their agent and paid for by the tenant or tenants. The tenant may have received many of them but many tenants will not keep their copies.
• All the documents are standard or available; nothing has to be created.
  • Some is statutory, such as annual accounts or the Memorandum and Articles of relevant companies.
  • Some is created by the freeholder such as invoices for service charge or ground rent
  • Some is third party creation such as the insurance policy and certificates
  • Some is routinely withheld from tenants (who nevertheless pay for their creation) for reasons which are hard to understand. As Professor Bright records: –

Landlords have refused to provide fire risk assessments to leaseholders, and have been reluctant to obtain, and disclose, details from external wall surveys

• There is no legal or express contractual obligation for the freeholder to produce the pack
• There is no legal obligation that the tenant obtains the pack; albeit lenders will almost certainly refuse to lend, and lawyers will probably advise clients not to proceed in its absence
• The freeholder is all too well aware of the power conferred by the tenant’s need for a pack. They have the tenant ‘over a barrel’. In other words, the tenant is vulnerable, advised or not, rich or not
• It is a document central to leasehold but is wholly unregulated under current administration charge regulations

This means that the tenant must request a pack from the freeholder who will usually agree to provide one for a fee. This article, informed by a leaseholder survey I carried out, and decisions in the First Tier Property Tribunal, will consider the legal position when a freeholder agrees to provide a pack either conditionally (by requiring a concomitant waiver of disputes for example) or for a very high price (as we shall see the former Government considered £200 reasonable but failed to lay this down in law). I examine four possibilities: –

• That there is an implied term in the lease that the freeholder should provide the pack unconditionally, promptly and at a reasonable fee, or, possibly, at cost
• That the term should perhaps be implied in law as a facet of this particular, peculiar type or class of contract
• That the correct construction of a long lease is that the freeholder must provide reasonable assistance to the leaseholder in order to facilitate efficient operation of the transfer machinery
• That demanding a waiver of contract rights in return for the pack is lawful act duress or unconscionable conduct or both
• That demanding a very high fee in return for the pack is lawful act duress or unconscionable conduct or both

I have been running a major survey on the experience of long leaseholders in England and Wales, which showed that the bulk of fees are in the £200+ range with substantial numbers more than double the Government’s assessment of a reasonable fee

The average from this is around £330, which underpins an argument of an average overcharge of at least £200, meaning that there are super-profits of perhaps £50,000,000-60,000,000 being made from this monopolistic behaviour.

One agent’s website advises that they charge £300 for the pack and £150 for up to six questions. This brought back the old trope about lawyers: –

• How much do you charge for a question?
• £150 for six questions
• Isn’t that quite a lot?
• Yes; you have four questions left