Hot property: key residential property developments in 2018

Law Commission 13th programme of law reform

Residential leasehold law is a major topic of the Law Commission’s 13th programme of law reform, and there are already proposals for reform with a focus on enfranchisement and commonhold, and a review of the right to manage.³

A number of solutions for residential leaseholders are proposed, with the aim of dealing with a lengthy, costly procedure which is diÿcult to navigate and, often, has an outcome that is uncertain, unsatisfactory and arbitrary. Any changes to the law must, however, comply with human rights legislation and take account of the impact of reform.

CMA legal services market study

The final report from the Competition and Markets Authority (CMA) following its market study on purchasing legal services in England and Wales is, in general, positive in relation to the provision of conveyancing services.› Key takeaways relate to transparency and pricing.

Conveyancers need to know that the CMA concluded that consumers find it hard to make informed choices because of little transparency about price, service and quality (the Legal Services Board says that only 18% of legal services providers publish their prices online. There has been no change in the proportion of firms displaying prices on their website between 2015 and 2017).› This weakens competition between providers.

There are also concerns about the competence of conveyancers and the quality of service provided by them. Pricing information should be provided in a way that is easily digestible, while accurate and comprehensive. On that note, see commentary on price transparency rules below.

Another issue of note relates to intermediaries, particularly in relation to referral fees. Though the evidence is that improvements in eÿciency and greater use of technology have been encouraged by the presence of intermediaries, the share of referral fees going to conveyancers has been falling while that of intermediaries has been increasing. This means that conveyancing is becoming less profitable.

Conveyancing fraud and the Dreamvar ruling
What is the extent of a conveyancer’s duty to check the parties’ identity at the start of a transaction in light of the constant risk of fraud?

The Court of Appeal found that even though Mishcon de Reya (MdR) had acted honestly, it was effectively a breach of trust to part with the purchase money when it was a sham sale (P&P Property Ltd v (1) Owen White & Catlin LLP (2) Crownvent Ltd: Dreamvar (UK) Ltd v (1) Mishcon de Reya (a ÿrm) (2) Mary Monson Solicitors Ltd and Law Society (intervener) [2018] EWCA Civ 1082). The solicitor only has authority, under the Code for completion by post, to release the purchase monies to the true owner: releasing them to a fraudster will be a breach of trust. As for the seller’s law firm, Mary Monson Solicitors Ltd (MMS), the Court of Appeal held that a seller’s solicitor warrants that it acts on behalf of the genuine property owner, so MMS was found partly liable to pay a contribution to the compensation.

The ruling is particularly relevant to smaller conveyancing practices that are perhaps more vulnerable to fraud. Careful due diligence and checks as to the parties’ identities are vital in view of the risk of fraud.

E-signatures

Electronic signatures are as valid as traditional handwritten signatures, the Law Commission has confirmed; in addition, it believes that no formal change in the law is necessary.⁶ 

What form could valid e-signatures take?

The Law Commission believes that a typed name or even a single click can be suÿcient to provide legal authorisation if intention to do so can be shown. The commission consulted on the issue throughout 2018.› It is now considering whether and, if so, what legislative reform or other measures are needed to address these issues. The commission’s final policy is now keenly awaited.

Social housing

A ‘new deal’ for social housing is under consideration by government. Last year saw the government consulting on proposals to ‘rebalance the relationship between landlords and residents, tackle stigma and ensure social housing can act as a stable base and support social mobility’.⁸

So, how is the MHCLG proposing to do this?

The regulatory framework is likely to be strengthened so that it focuses on the governance and financial viability of housing associations, and on how residents are treated and the level of services they should expect.⁹ Alongside the green paper, a call for evidence was published, seeking information in support of this review.¹⁰ Draft proposals are now awaited.

HM Land Registry’s quality strategy

HMLR is taking concerted steps to become ‘the world’s leading land registry for speed, simplicity and an open approach to data’, maximising the accessibility and re-use of its data, according to its latest business strategy.¹¹ Data quality and quality assurance is a central theme of its strategy, with HMLR planning new customer support centres to provide ‘a consistently high-quality multi-channel experience, and develop greater insight into customers’ evolving needs’ (page 9).

HMLR will also focus on automating the most-straightforward updates and aspects of complex processes, where possible, but concedes that automation needs improved and digitised internal processes and systems. In addition, counter-fraud capability will be enhanced.

Land transaction tax

Land transaction tax replaced stamp duty for land and property transactions in Wales from 1 April 2018. The Welsh Revenue Authority collects the tax, and no HMRC returns are required.¹² The tax rate and band depend on the type of transaction.

Price transparency rules

December 2018 saw the implementation of price transparency rules imposing requirements on law firms for conveyancing, and other practice areas.¹³ Effectively, these rules require conveyancers to consider their clients’ needs for early and clear information.