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Conveyancers could face £500m damages for negligence (22 May 2017)

Date: 22/05/2017
Duncan Lewis, Legal News Solicitors, Conveyancers could face £500m damages for negligence

An Alternative Business Structure (ABS) is preparing group negligence action against conveyancers who work for the developers and purchasers of ‘help to buy’ leasehold housing.

Buyers have claimed that their lawyers failed to identify problems with soaring ground rents, resulting in clients being stuck in leasehold homes that they cannot sell.

Louie Burns, the managing partner and co-owner of Leasehold Law has said that the group negligence action will be based on the failure of conveyancing solicitors to warn buyers of the “very onerous ground rent terms” found in the leases to their new homes. Mr Burns believes that the total damages claimed could be more than £500m. Leasehold Law has been an ABS since 2015, and it is part of a group of three companies: Leasehold Law; Leasehold Valuers and Leasehold Solutions.

Examples of the “onerous” ground rent terms include ground rents being doubled every decade, causing costs to soar, and excessive charges for any DIY work to be carried out. For example, leaseholders have reportedly been charged as much as £5,000 for permission to install a conservatory at the back of their property, despite planning permission not being required. Mr Burns has criticized the “useless clauses” that are inserted into leases in order to build up the freeholds as an asset class which could be sold.

Mr Burns has said that the buyers involved in the acts of negligence were sold ‘help to buy’ packages, and were offered thousands of pounds cashback provided they complete the sale within 28 days and use the solicitors recommended by their developer.

Government statistics show that one in five private homes – about 4 million – are leasehold, including 1.2 million houses, and the HomeOwners Alliance believes that almost a quarter of these homes have 80 years or less before full ownership returns to the freeholder, meaning the properties are extremely difficult to sell. Paula Higgins, chief executive and co-founder of the HomeOwners Alliance, said “A buyer’s solicitor should be acting solely on the buyer’s behalf during the transaction, but allowing developers or estate agents to recommend solicitors means they are in the pocket of two different parties.”

Mr Burns said that of the first 80 cases, 57 involved the same freeholder which had purchased the freeholds from a developer.

Leah Kesby of Duncan Lewis Solicitors commented:

“This seems to be becoming an increasingly common issue amongst buyers as property prices and population density continues to increase. Not only are leasehold properties on occasions more expensive than freehold properties to buy nowadays, but without the correct advice being provided from the outset, buyers are increasingly feeling that they have been exploited and mis-sold their property.

Given the magnitude of the importance to purchase a property and the sizable financial commitment that comes with it, one way to avoid these complications is to insist on instructing independent conveyancing solicitors who may not be indirectly conflicted. Your conveyancing solicitor will provide fair and impartial advice on these relatively precarious transactions and avoid having to bring a negligence claim once the damage has been done. Whilst there may be a financial incentive for using the “recommended” solicitors, the savings you can save will pale in comparison to the potential overall costs that may be involved by way of the transaction.

Getting proper advice at the outset is of critical importance; this is especially worth noting if you are a first time buyer, new to the process and potentially more susceptible to these pitfalls.”


Leah Kesby is a trainee solicitor in Duncan Lewis’ Civil Litigation department. She is currently undertaking her final seat in Professional Negligence.

Duncan Lewis Professional Negligence Solicitors

Duncan Lewis Solicitors' professional negligence litigation team has a niche claimant practice acting for individuals against legal (solicitors, barristers) and construction (architects, surveyors) professionals. The team can help clients who have suffered as a result of professional negligence to recover financial compensation for losses incurred. For expert advice on professional negligence claims, please call Duncan Lewis on 033 3772 0409.

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