The Unintended Consequences of Our Actions

Zahrah Aullybocus examines the unintended consequences of our actions in leaseholds, rising service charges, and deregulated building regulations. She highlights how developer pressures, overwhelmed conveyancers, and growing reliance on technology have led to systemic issues, questioning whether automation can replace human judgment. The article calls for proactive change to prevent history from repeating itself. 

There is an old saying that we plant the seeds now for the tree whose shade we are going to sit under in 25 years’ time.  

What we are seeing now are the fruits of the seeds that were planted in the early 2000s of rising ground rents, increasing service charges and de-regularisation of building regulations (now resulting in a building safety crisis).  

How has it come to this you ask, and why did conveyancers/lawyers not pick up on this when new leases were granted? (Including the use of “leasehold” for new houses?). The seeds were planted by the developer’s lawyers, under the threat of:  

• “if you do not agree, our client will pull the plug and sell to another buyer”  

• “we will not agree to any changes as all the plots need to be the same” (even if there are legal errors) 

The desperation for a roof over your head – the stability that having your own ‘safe space’ that you can call ‘home’ is real. This inevitably meant that such clauses went under the radar (even if the solicitor did pick up on the unfair term) because the end client was “willing to pay” or did not think through the consequences of their actions for future sales. (I had a client accept a clause that meant they would be responsible for covering any cladding remediation costs on a building during the pandemic, at which stage the stories were already coming out about people being hit with huge bills in the thousands for remediation costs. He was warned that it could end up costing him more than his saving in stamp duty! Did he listen? No.) 

Alternatively, the developer will have forced the buyer to use their “recommended” conveyancer and I hear all too often that little to no explanation or advice was given or even receiving a last-minute report to say the property was leasehold. A transfer of part on a newbuild property now almost reads pages long like a new lease. The indiscriminate use of estate service charges on both freeholds and leaseholds has now landed on everyone having to negotiate Deeds of Variation adding costs and time to many transactions.  

Your front-line conveyancer perhaps lives in a bubble, concentrating on what is in front of them for fear of the “complaint” that timescales are not met, or for fear of putting a foot wrong that something is not perfect otherwise having regulators breathing down our necks. The people out there offering us “solutions” are not usually conveyancers and only have the one answer: “technology.” Conveyancing is anticipated to turn into a fully “box ticking” exercise so that the use of one’s brain is taken out of the process, with it being a fully “automated” process done by AI (with perhaps a little supervision by a human). Yes sure, we are all looking for the “hack” or “shortcut.”   Not sure how this will serve our clients when the technology is not yet smart enough to pick up when clauses are unfair and be able to predict “what’s the worst that could happen?”  The human mind is built to predict danger and has the most powerful processor known to creation built in. (I have been looking into this, as perhaps mine doesn’t work as optimally as it should do. I know my husband would love to plug me into an update so he could have Zahrah v.2.1!) 

Much has been called into question with the mounting pressure on conveyancers: We are expected to be forensic detectives (AML compliance), on top of doing legal work and mountains of admin. It appears that once we cut off the head of one hydra and another two grow in their place, the battle continues. The words of Bonnie Tyler’s I need a hero come to mind: 

🎶 Where have all the good men gone 

And where are all the gods? 

Where’s the streetwise Hercules 

To fight the rising odds? 

Isn’t there a white knight upon a fiery steed 

Late at night, I toss and I turn 

And I dream of what I need . . . (I’ll let you sing the rest in your head!) 

A certain complacency has crept in with a reliance on technology for box ticking and chasing. There is a cost to every decision – at the cost of “making money”:  

1. Do you pile it high and do it cheap? – who loses out here? The conveyancer at huge risk to their PII with perhaps not so qualified staff manning the front lines, or the client who is handled by a ‘team’, doesn’t get to speak to the same person twice or doesn’t have individual needs catered to (I have had a lot of clients admit to me they struggle with learning difficulties and so need hands holding more than usual).  

1. Bite the hand that feeds you? Some businesses thrive on referrals. All well and good if no fees are being paid, but if something crops up, loyalties can be questioned as to whose best interest you are acting? The agent who has sent you the work to ensure that the transaction completes or the client who really is risk averse? What are these companies doing to promote their ‘values?’ (apart from entering paid for awards?) Even if we did away with referral fees, any ‘referral’/recommendation could be called into question – who is making it and for what reason? What do they have to gain from it? 

1. Do the right thing, right now? Raise legal fees, maintain an independent stance, and have the work properly serviced by qualified staff? Sounds good to me, but we are always going to have the tension with (i) and (ii) above and those leaders that have FOMO. The public need to be educated to figure out what suits them. They need to be the one assembling their ‘team’ to help them move. For many the first encounter will be the estate agent, who may well be twisting the truth and not impartial to conditional selling: “We can control the solicitor or ensure they speak to us so we can help you move quickly.”  🤔 

We have ended up in a situation where transaction times are taking way longer than they did 20 – 30 years ago when the postal service was used, but we have also ended up with more and more work on the conveyancer’s plate.  

It is clear to me that “something is rotten in the state of Denmark” (England & Wales). My call to arms is this:  What seeds can we plant now so that future generations may enjoy its shade?  

A common definition of insanity is to do the same thing over and over again and expecting different results. Material information is another version of HIPs. Take note that they were introduced at a time of financial crisis. The re-attempt under the guise of National Trading Standards “Guidelines” is also falling under the ‘cost of living crisis.’  Not a time of prosperity. As the pirates would say “the Code is Guidelines only” (not legally binding). Our decisions and actions have the pesky habit of turning out differently than we thought. There’s no shortage of prominent examples of interventions gone sideways. At varying levels of madness, they teach us valuable lessons about decision-making and life in general.    

Ignorance and analytical errors, means we inevitably face limitations or make mistakes. (AI is only going to be as good as the people that programmed it). Humans often act based on short-term interests, neglecting the long-term consequences. Not because they don’t matter. But because a pressing immediate problem outweighs the potential challenges down the road. And of course, who doesn’t want the easy life? 

What we need to do now is have short term pain for long term gain to include addressing the issues of: 

• Conditional selling by agents – it is wrong and illegal but yet the practice is allowed to continue with no consequences for those that are caught; 

• Having properly qualified staff on the front lines – ones who are not afraid to deal with any challenges. Charging appropriately higher conveyancing fees to cover staff retention and PII would assist; 

• Management companies with opaque charges to those they serve, extortionate fees (on both sales and purchase, freehold and leasehold) – surely the tech guys can sell them something to organise themselves so that the information can be generated at a press of a button? 

• Developers – how on earth are you going to ‘volume’ house build when you have no control over the quality or size of the build? Newbuilds are built like rabbit hutches with a lot of corners cut. Suing your developer is an expensive process and structural warranties, as I am discovering, are like any other insurance – it’s not guaranteed to pay out, leaving homeowners in financial difficulties with unsafe homes that cannot be sold. The building safety crisis is simply going round in a vicious cycle – developer builds rubbish home; hapless homeowner ends up paying for their mistake;  

• The leasehold reform debate will continue with those pushing for “commonhold” akin to leaseholds with residents run management companies. One thing is for sure, allow the developers to use the ‘cop out’ of handing over buildings to residents will mean individual homeowners will still continue to be landed with large bills for building safety defects not of their making.  

• Technology – ensure that this is under the control of lawyers so that it is used as a tool and not a replacement. Its reliability has already been tested with the cyber-attacks property lawyers face on a daily basis – everyone seems to have forgotten the black out last year where a large number of firms were affected by an outage. The “pro digitisation” gang seems to completely ignore the problems of cyber safety and reliance on technology. They are so caught up in their own propaganda they can’t see the view from the other side of the fence. 

Now is the time to plant seeds for the easier life in the future. How can we continue down this road with the same kind of lawyering that got us into this mess in the first place? Answers on a postcard please.