Quiz - how well do you understand your lease?
Understand the key things you should know about your lease. If you are a purchaser, this can help make sure your solicitor has covered all of these points and explained them clearly to you.
Today the Law Commission published its final report on ‘Event Fees’: Event Fees in Retirement Properties.
Event fees include “transfer”, “contingency”, “deferred-management” and “selling-service” fees. Fundamentally, all of them are triggered by an event (such as resale or sub-letting). For this reason, the Law Commission refers to them collectively as “event fees”. Leases of retirement flats and bungalows often include a fee triggered by certain events, such as when the owner sells or sub-lets their property. These fees are typically set at around 1% of the property sale price but may be as high as 30%.
In summary, the Law Commission’s report recommends a code of practice to be approved by the Secretary of State for Communities and Local Government. The Commission states that the code of practice will:
- Limit when an event fee can be charged, and, in some situations, the amount that can be charged; and
- Impose stringent obligations on landlords to provide transparent information about the event fees payable by a consumer early in the purchase process. This information will be in a standardised format, and will enable a consumer to see and take account of:
- Information about the event fee – how it is calculated, who receives the fee, and what a consumer receives in exchange for the fee; and
- How much the event fee is likely to be depending on changes in the property’s value.
- The code of practice should be supported by an amendment to the Consumer Rights Act 2015 so that it can be enforced by consumers.
- Where there is a breach of the code of practice, in most cases the event fee should not be payable.
The Commission submits that these and its other recommendations:
“Will address concerns that event fees are being charged in unexpected or unfair circumstances. They will also ensure that consumers are provided with clear information about event fees at an early stage in the purchase process.
The recommended reforms are also intended to reduce the uncertainty currently surrounding the legal status of event fee terms. With these reforms, stakeholders have told us that private investment of £3.2bn is likely to be forthcoming in the next decade, and the supply of specialist retirement housing expanded significantly.”
- Law Commission progress report published in the summer 2016