The SRA has published new guidance to help firms understand their obligations and how to comply with them. The guidance aims to explain what the SRA’s Standards and Regulations require when acting for clients who are buying leasehold properties and to avoid possible breaches of those requirements.
The SRA is concerned that clients are not receiving appropriate advice on onerous clauses in leases. This arises most frequently in the context of ground rent clauses for newbuild properties. Depending on their wording, such clauses can result in an increase in the ground rent payable by the lessee from a few hundred pounds a year to more than, for example, £70,000 a year, over the course of the first hundred years of a lease. Such clauses can have a significant impact on the lessee due to the unexpectedly high costs and impact on the future value and saleability of the leasehold.