Annual Report: freehold vs. leasehold

Published on Friday, 09 June 2017. Posted in Case Studies

Whose responsibility is it anyway? This case summary looks at a tenure dispute - find out more about the complaint and the Ombudsman’s ruling after the agent claimed long leaseholds amounted to ‘the same thing’ as freehold.

The buyer in this case explained that they told the agent that they wanted to purchase a freehold property.  The sales particulars for the property that they intended to purchase did not state the tenure.

The agent said that it was not their role to ascertain this information; indeed they said that they did not ask any tenure questions about properties they marketed.  That, they said, was the role of the conveyancing process.  However, they explained that they had worked in the local area for over 25 years and they knew that many of the properties were long leasehold.  However, they said that they felt it amounted to ‘the same thing’ as freehold, so they thought there was no need to ask about tenure.

Paragraph 7i of the TPO Code of Practice 2015 reminds agents that they are required to disclose any information of which they are aware or should be aware in a clear intelligible and timely fashion by law to comply with the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Agents must also take all reasonable steps to make sure that all statements about a property are accurate and not misleading.  All material information must be disclosed and there must be no material omissions which may impact on whether a buyer goes ahead.

The Ombudsman expects an agent to ask questions about the property on various matters, one of which is tenure.  Paragraph 7k of the Code states the information that should be provided for leasehold property, such as the length of the lease, service charge and ground rent.

The buyer was entitled to be provided with full and correct information at the outset but in this case she was not.  Without the full information, the buyer made a different ‘transactional decision’ to that which she would have done.  When her solicitor told her that the property was, in fact, leasehold, she immediate withdrew from the transaction and made a complaint.

The complaint was supported.  The Ombudsman directed the agent to refund the buyer’s survey and legal fees, of £1,100 and made an additional award of £200 for the aggravation caused by this matter.  The buyer had also explained that she had placed all her belongings in storage, having moved out of her previous property in anticipation of this purchase.  No award was made for storage costs as requested; it had been the buyer’s decision to incur these costs prior to any firm commitment to purchase.

The agent explained to the Ombudsman that, as a result of this complaint, they had changed their policy and now obtain Office Copy Entries on every property.