Some residential leases require the leaseholder to pay a fee when they resell the property, sub-let it, and on certain other events. The fee can be up to 30% of the property’s resale price. The money either goes to the landlord or into a fund for the long-term maintenance of the site.
Event fees are common in specialist housing for older people. Smaller event fees are found in simpler retirement flats. A higher percentage fee is payable in full-service retirement villages where there may be a gym, swimming pool and 24-hour care available on site.
After public dissatisfaction at how some of these fees were used, the Office of Fair Trading investigated. Its 2013 report concluded that some terms were potentially unfair contract terms, but there was “a lack of clarity in the legal framework”: consideration should be given to legislative reform. In September 2014, the Department for Communities and Local Government asked the Law Commission to look at the problem, the law and possible solutions.
The consultation is open to the general public. The summary, full consultation paper and response form can be found on the Law Commission website: http://www.lawcom.gov.uk
The aim is to make interim recommendations for reform in Summer 2016. If the project continues we will make final recommendations in March 2017.