Bernie Wales: Why leasehold law is never boring

He’s a well-known character among landlords and for anyone interested in leasehold property management, he is the ‘leasehold guru’.

And with 40 years of experience in the sector, Bernie has built up lots of experience.

He also warns that many leaseholders will need to take note of a new law taking effect that could have a huge impact on their building – and wallet. He explains more later.

For landlords, he says, one of the biggest leasehold issues they approach him with is over wanting to offer serviced accommodation – such as Airbnb.

Bernie explains: “The answer, almost exclusively, is no because it’s a trade, it’s a business and residential leases generally prohibit trade and business.

“So, that’s the number one problem people get themselves into because they normally come after they’ve started doing it and then they’ve got themselves into a spot of bother.”

Most popular landlord leasehold issues

Next on the list of most popular landlord leasehold issues is to do with alterations.

Bernie says: “Normally they do it when they’re refurbishing a flat and they want to do a whole load of stuff and they can’t necessarily do that.

“The number three area is to do with finances, service charges, ground rent and all of the money side of leasehold.”

Bernie also highlights that landlords are confused and worried about the discussion about rent reform and stories that aren’t based on fact.

He adds: “The government is wanting to change the system and has talked about various things and people pick up on that and think, ‘Oh, the law has changed’, and it hasn’t.

“The only bit that has changed is you can’t have any ground rent on new leases. But all of the other proposals haven’t quite come along yet.”

Started his journey with a property management company

Bernie started his journey with a property management company in 1984 and built that up until it was managing around 10,000 units – before selling it to four of his management team.

He has since built up a couple of businesses and they are all in the world of property management.

Bernie keeps busy with leasehold consultancy and advice, plus he runs a website and a Facebook group to help leaseholders understand leasehold.

But why focus on leasehold?

Bernie replies: “That’s a good question, really. And no one who had their head screwed on right would actually choose to do it.

“I’ve obviously been involved with leasehold law all of the time and leasehold is, by its very nature, complicated and leases are complicated, and every block is different.

“So, all I’m really trying to do is help people understand.”

Every lease is different

While he stresses that every lease is different, the leasehold terminology sees people getting confused easily.

Bernie adds: “It’s not necessarily, as some people think, well, it ought to be this and it would be fair if it did that, etc. And quite often in leasehold, it can be entirely legal, but unfair.

“It’s a system that has built up over the years and has a whole load of case law to go with it, which does make it very confusing.”

He points out that solicitors and lawyers also contact him for advice on leasehold issues – though he isn’t a lawyer by training.

Bernie says: “I’m not very good at delegating so where over the years I’ve instructed lawyers or accountants or surveyors or whatever, I always watch what they do and ask questions and learn from them.

“That’s so that next time I can instruct them better and make sure I’m giving them the right information.

“But I’m just curious to learn and the more you learn, the more you find you don’t know and therefore, you just want to keep learning until one day you might get to know it all, but you never do because the world moves on.”

Bearer of bad news to a landlord client

There’s also another issue which sees Bernie being the bearer of bad news to a landlord client on a regular basis.

Bernie explains: “Sometimes people shoot the messenger because they think you’re not providing the answer that they want.

“They’ve got themselves into a spot of bother, or they’re being told by a managing agent that they owe all this money or whatever.

“And they quite often come to me for an answer, you know, a get out of jail free card. And quite often you can’t provide that because they are in the wrong, because they haven’t understood the rules.”

He adds: “I do bear bad news fairly often and you have to deliver that in a certain way.

“Having said that, not every landlord freeholder, not every managing agent follows the rules properly either.

“And there are occasions when you can point out, well, no, that money isn’t owed because you didn’t follow the process to get that money, or you haven’t demanded it in the right way or whatever it might be.

“So, there are occasions where the professionals get it wrong as well. And then the leaseholder sometimes does get a get out of jail free card.”

Landlords could avoid leasehold issues

Bernie says that landlords could avoid leasehold issues if they took time to read their lease and, if they don’t understand any part of it, to educate themselves.

He also points to a massive change in the world of leasehold that could prove to be a serious and costly undertaking for the leaseholder.

Bernie says: “The Building Safety Act 2022 is now being enabled clause by clause to bring about enormous change in the fire, health and safety areas of leasehold property management.”

One upside of the new law is that it makes the likelihood of a Grenfell Tower happening again more remote.

Bernie adds: “But what’s not so good is the vast expense which will result for leaseholder.”

Alongside the cost implications, Bernie also says there will be confusion over who exactly is the ‘Responsible Person’.

Be warned, Bernie says a word that leaseholders will hear a lot of in 2023 is ‘compartmentation’ which will see lots of arguments about ‘flat front doors’ and who is responsible for making them 30-minute fire resistant.

If this, or any other leasehold issue affects you, then be confident that if anyone knows the answer, it is Bernie Wales.

For more information about Bernie and his work, he has a very good website and blog to enjoy.

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