In the spring of this year, some law firms decided not to take on any new clients purchasing leasehold properties where the building is above five storeys or 11 meters, whichever is lower, due to complexities surrounding The Building Safety Act (BSA).
However, some law firms decided to push on and navigate themselves through the BSA as they were unsure what the risks to their business might be.
Late autumn is the main time throughout the year in which professional indemnity insurance (PII) providers choose to renew policies for conveyancing firms and this year, questions are being asked around how many leasehold properties the firm is transacting, how many fit BSA criteria and how many they plan to do for the year ahead.
As a result of this mass renewal, firms are finding it difficult to obtain insurance if they continue to transact BSA work, or in some cases, their annual renewal premium is double the prior year meaning they will most likely take the tough decision that completing on BSA transactions is not financially viable for the firm.
Clients are contacting me to explain they instructed a firm up to as long as six months ago and are now ready to exchange contracts.
The firm are sadly communicating that they can no longer complete the matter due to insurance restrictions and they will have to find another firm to take over the matter for completion.
Time will help the situation as more landlords and management companies deal with qualifying buildings and qualifying leases.
Timescales will reduce and remedial works should start to be scheduled where needed making the process easier.
Clearly a firm’s appetite to risk is their decision but that is no help for clients who have been led down the garden path.
My best advice to anyone thinking about buying or selling a leasehold property in the near future is to ask a law firm they obtain a quote from if they have experience in the BSA before deciding who to instruct.
If the person on the phone can’t answer the question, that’s normally a sign to avoid.
If you are mid-transaction and are concerned with the lack of progress or worried about your chosen firm’s ability to complete, please search for a new firm sooner rather than later to avoid further delays.
Chris Barry is business development director at Thomas Legal
