Three cheers for apprenticeships!

Year 13 students around the country got their A-level results this morning and many will be off to university in the autumn. There are plenty of degrees on offer in property-related subjects and certain universities such as Reading and Nottingham Trent have a strong reputation for delivering a wide variety of courses.

But as Dave Sheridan, Executive Chairman of ilke Homes rightly pointed out today, not everyone who leaves school wants to go to university and not all 16-year olds fancy two more years in sixth-form. So why don’t we hear more about the alternatives for school leavers?  With continuing uncertainty over Brexit and a worsening skills gap in the property industry, it’s never been more important to make sure the nation has a workforce fit for the future.

A great option is to do an apprenticeship. But as Dave says, for too long they have been regarded as a second-best option. He thinks everyone in the sector should be promoting the fact that apprenticeships, training and upskilling programmes are provided by lots of employers and they are not just for school leavers. We agree. At Ringley, training is a big part of what we do and we have built our own apprenticeships in IT/social media, business administration and customer service finance and property management.

We are an Investors in People company and we’re delighted to maintain this accolade for the great care and attention with which we look after our staff, helping them develop, improve and gain greater job satisfaction. In 2012 Ringley achieved the silver standard – which is rare for small companies.

As part of our commitment to training, we have fully embraced the apprenticeship route for new staff. Our MD Mary-Anne Bowring is proud that Ringley is an organisation that fundamentally believes in investing in its people and supporting their career progression. We prefer to help our own staff to attain professional qualifications rather than assume a university degree automatically delivers candidates with a true understanding of property and law in practice. Mary-Anne firmly believes there is no substitute for on the job training; as skills and experience mature then we believe true connections are made between academic learning and practical application. This is why we offer our staff training contracts to support Association of Accounting Technicians (AAT) Institute of Legal Executives (ILEX) and RICS qualification routes.

So if you or someone in your family is interested in a career in property, don’t forget there are plenty of ways to get those all- important property qualifications. As many of our staff have discovered, getting a degree isn’t the only way into the property business.

Want to make money from short-term lets? Check your lease!

Many of us now use short-term lets to pay for our holidays or to make a regular income.  As we’re right in the middle of the holiday season you might be tempted to give it a go. But before you do – think again. Here’s a cautionary tale for renters or leaseholders thinking of using Airbnb or another online platform to make a bit of extra cash.

Want to make money from your flat? Always check the small print before you let it out.

Toby Harman was taken to court in July and was hit with a whopping £100,000 fine for renting out his London flat on Airbnb. He had been renting out his ‘cosy studio apartment with a hot tub’ on the short-term lettings website since 2013. Sounds great if you fancy a bijou London base for a spot of sightseeing. Unfortunately for Toby, he was caught out when Westminster City Council discovered the host masquerading on Airbnb as ‘Lara’  was in fact one of their tenants. It turned out that Toby was sub-letting his flat in strict breach of his social housing tenancy agreement. After a failed appeal he was evicted and told to pay back £100,974 in unlawful profits.

This case revolves around the dos and don’ts of social housing but the same rules are likely to apply to any homeowner who doesn’t own their freehold.

f you are renting, it goes without saying that your landlord may not be thrilled to find you are sub-letting his property. Eviction is the likely outcome if you’re caught out and you could end up in court.

And if you are a leaseholder, don’t even think about going down the Airbnb route without first checking your lease. Read the small print – the devil is always in the detail.

Most leases state that a flat can only be used as a private dwelling and short-term lets are very unlikely to fit the bill. This is clear from the widely reported 2016 case of Nemcova v Fairfield Rents Ltd – now known as ‘the Airbnb ruling’. Well worth a closer look if you’re in any doubt.

Another important point was highlighted last year in the case of Bermondsey Exchange Freeholders Limited v Ninos Koumetto. This case drew attention to the fact that most residential leases don’t allow owners to share possession or occupation of their flat or to use it for a commercial purpose (which includes AirBnB lettings) without consent of the freeholder. So by all means talk to your landlord but don’t be surprised if you get a negative reaction.

What all these court cases clearly show is that short term lets are a minefield for leaseholders. So tread carefully!

Our service to you is changing – for the better!

Last week we blogged about the likely regulation of property agents. Today it’s official. Change is coming. And it should have a positive impact on the way the residential sector delivers services to our customers.

Lord Best has delivered the final report of the Regulation of Property Agents (RoPA) working group. This sets out ways to make property agents more effective, more profesional and more accountable to their clients. For some time, the government has been determined to regulate residential property agents, enforce a mandatory qualification and set out a new code of practice. This will now happen but it will take time. Setting the wheels of legislation in motion is rarely fast – and with Brexit taking up parliamentary time, don’t hold your breath!

But there is now no doubt that regulation is on its way. The initiative has cross-party support and the public want to see change.

R0PA report: In future, only qualified agents will be able to operate in the leasehold sector

So what is being proposed? First, the plans affect all residential agents. That means everyone working in sales, lettings and leasehold/block management and build-to-rent. In his report, Lord Best suggests a new regulator, accountable to the government and responsible for producing a new code of practice for all residential property agents. That means firms AND individuals. A list of “reserved activities” will also be produced and companies carrying out those activities must be regulated and have a licence to operate. Individuals will need a qualification and a licence to practice. The regulator will issue the licences. They can be taken away if businesses or individual property agents don’t play by the rules.

Lord Best also proposes the new regulator should set the syllabus for a mandatory qualification and this should be approved by Ofqual. The suggestion is that sales and lettings agents be qualified to level 3 of Ofqual’s Regulated Qualification Framework and block managers should be qualified to level 4. In English, level 3 is the equivalent of the IRPM’s Associate qualification and level 4 equates to MIRPM.

What all this means is that, as we speculated last week, some agents will need to upskill, while others will be granted a licence to practice based on their existing qualifications.

So now it’s over to government to make this happen. Ultimately the aim is to protect consumers, support an ethical culture throughout the sector, and prevent bad practice. It’s hard to argue with that!

Leak detection – how much could you save?

Do your neighbours have contents insurance? If not, a leak or a burst pipe in a neighbouring or upstairs flat could end up costing you thousands of pounds. To help solve this problem, there are leak detection systems on the market that could be worth thinking about.

The Association of British Insurers estimates that a burst pipe can release enough water to fill 48 bathtubs. Imagine that amount of water flooding through the ceiling of a flat and then think about the damage caused as a result. Sadly, that scenario isn’t an unusual one. Between 2014 and 2016, the total cost of ‘escape of water’ claims rose by 24%. And during the first nine months of 2017, claims like this cost insurers £483 million.

Even a small amount of water damage can mean claiming on insurance to pay for redecoration or a new ceiling

The ABI reckons claims are increasing for a number of reasons. Everyone wants a high spec kitchen with integrated plumbed-in appliances and there are now more bathrooms in new properties. Use of push-fit pipes by the plumbing industry is increasing; and in some cases, pipes are being poorly installed. Whatever the cause, for property managers as well as residents, a serious leak in a residential block is a major headache.

Residents frequently fall out over water damage and insurance claims, which on average are around £25,000 for a burst pipe. Add to this the fact that 1 in 5 UK homeowners has no contents insurance and property managers inevitably find themselves involved in disputes. Many block insurers are now introducing additional excesses for water damage. So leaks add up to a big problem for everyone.

Last month, leak detection specialist Aqualeak produced a new technical guide that explains the way leak detection systems work and the components required. It includes easy-to-understand technical illustrations showing how systems are installed.

Another company, LeakSafe also has a list of frequently asked questions on its website which are a good starting point for anyone wondering if these systems are worth the investment.

Obviously, installation comes at a cost and retrofitting isn’t possible in all existing developments. But if you live in a block that has had problems with leaking pipes – and have paid the price – it could be worth considering. Maybe raise the issue with your property manager or freeholder at your next resident’s meeting.

And the really good news for flat owners – apart from preventing water damage of course – is that leak detection systems can have a positive impact on block insurance premiums.

Rogue agents – your days are numbered

The government is calling time on rogue agents. Compulsory qualification and regulation are on the way. To-date, the property industry has always been self-regulating, with a mix of qualified and unqualified agents out there and government reluctant to get involved.

This is unacceptable – with customers expected to pick their way through a smorgasbord of different property industry bodies, all saying their members are reputable but still, in some cases, giving them enough rope to hang themselves with.

Until now, the argument has been that individual member organisations were capable of regulating their own members and the market would work in favour of professional agents, pushing out the rogue operators. This softly-softly approach hasn’t worked. There has been a race to the bottom, with consumers too often seduced by low fees, finding out too late that their advisers can’t deliver on their promised service offer.

fter relentless lobbying from both industry and consumer organisations, government has tightened up on redress for customers, has moved to protect deposit monies and has finally recognised the need for proper regulation and qualifications for all.

The government is finally calling time on rogue agents

Speaking at a major leasehold event in June, Lord Richard Best, the chair of a working group looking at regulation of property agents, told managing agents that in future their firms will be regulated. They themselves will need to upskill if they don’t already hold recognised professional qualifications. What is certain is that “there will be a Regulator and there will be regulation – we need to sort out the rogues and raise standards,” says Lord Best. “Any new regime will apply not only to property managers but to letting and estate agents as well as to international property agents – with reference to UK sales – and to property guardians.”  

In future, all agents will need qualifications that are recognised by OffQual. Existing qualifications will be ‘grandparented’ or recognised under the new rules but some agents will need to ramp up their CPD or qualifying training in order to meet the new benchmark.

So the days of the cowboys are numbered – thankfully. But of course, all this takes time – two years at least thinks Lord Best. As chartered surveyors, we employ many well qualified and experienced property people at Ringley and we fully support any attempt to raise the bar of professionalism in our industry. We await the final recommendations of the working group with interest.

No new leasehold houses – but what about the old ones?

No more leasehold houses will be sold in England and Wales, the government said last week. Developers will no longer be able to hold homeowners to ransom by selling their freeholds and doubling ground rents and freeholders will be able to challenge estate management fees. Legislation willbe brought in to ban long leases on houses and ground rents will be kept to a minimum for both new build houses and flats.

No new leasehold houses are to be built – but what do you do if you already live in one?

This is welcome news for new homebuyers but what is being done about existing leaseholders who are already trapped by escalating charges?

There are an estimated 4.3 million leasehold homes in England and 1.4 million of them are houses. Campaigning group the Leasehold Knowledge Partnership believes that this equates to 100,000 families trapped in houses that are now impossible to sell because their contracts are so unfair. According to the Mail Online this week, “more than half of new houses were sold on ‘unfair’ leasehold terms in some towns last year” despite then Communities Secretary Sajid Javid pledging a ban in 2017. This is backed up by figures from the House of Commons which reveal that a total of 3,394 new leasehold houses were sold across England last year.

Communities Secretary James Brokenshire has now promised new laws to take the ban forward, saying “We will legislate to ensure that in the future – unless there are exceptional circumstances – all new houses will be sold on a freehold basis, with ground rents in future leases reduced to zero”.

So far so good. But the problem now, as the Leasehold Knowledge Partnership rightly points out, is that government is in danger of creating a two-tier market in the leasehold sector. Clearly the ban – when it comes –  is a step in the right direction for homeowners. But two issues remain. Legislation takes time, so what happens to those buying homes now? And what is the outlook for existing homeowners? The MHCLG now needs to apply itself to the issues being faced by thousands of families around the country and find a way to bring genuine fairness to the sector.

Leasehold reform – there’s more to come!

Yet more reform is on the table and is set to affect anyone with a leasehold home. Yesterday, the government responded to the Housing, Communities and Local Government Select Committee’s report on Leasehold Reform, and has come out largely in favour of the measures it is recommending.

More leasehold reform is on the way – but how long will it take?

Proposals include:

  • giving clearer information to consumers on how to buy and sell leasehold properties
  • Looking again at commonhold in light of the Law Commission’s recent report
  • working with developers on a standard ‘key features’ document so consumers have clear details of a lease before they buy
  • removing any financial value from future ground rent
  • ensuring the Law Commission is able to properly consider the use of unfair terms
  • updating planning guidance to ensure clear and transparent agreement between developers and local authorities on public areas and utilities to be adopted
  • considering recommendations on permission fees, major works (including a code of practice) and other charges.
  • exploring the best way to challenge unjustifiable legal costs, including looking again at legislation
  • exploring legal changes to forfeiture
  • extending compulsory membership of a redress scheme to all freeholders of leasehold properties
  • implementing improvements to the enfranchisement system as soon as possible

How long will these recommendations take –  and will some end up being watered down along the way? Nothing is certain. But what is clear is that there is now the will at policy level to make life easier for leaseholders. And that has to be good news.

If you are interested in reading the response document in full, you can donwload it here.

Landlords – enter at your own risk!

As a landlord, do you know when you have the right to enter a leaseholder’s flat? Most residential leases include a clause that allows a landlord access to a flat, if it is for a specified reason listed in the lease. Simple enough you might think. Well, not necessarily as the recent case of New Crane Wharf Freehold Limited v Dovener shows. The question raised here is whether or not a leaseholder who does not give prior permission for the landlord to enter their flat for a legitimate reason, is in breach of their lease.

Access denied – or is it?

The lease in question allowed the landlord access for a number of reasons as long as the flat owner had at least 48 hours’ notice. But when the landlord gave a time and date to inspect the leaseholder’s flat, he heard nothing – apart from an email from the leaseholder stating that he wasn’t happy about the landlord entering his property. A second letter was sent, including a new date for entry to the property. Again, no reply.

The landlord took the case to the First Tier Tribunal, arguing that the leaseholder’s failure to respond to his letters was a breach of covenant. However, the FTT ruled against the landlord, saying that the lease did not specify that access was only possible after hearing that the time and date given was acceptable.

The landlord appealed but lost. Again, there was no evidence that the leaseholder refused entry at the date and time specified by the landlord and so the leaseholder was not found to be in breach of the lease. This is a technical point but an important one for landlords.

There are two lessons to learn here. First, when landlords want to access a property, they must think hard about the way they word the notice to the leaseholder. And second, this ruling suggests that landlords should go ahead and try to gain entry on the time and date specified in any notice,  whether or not the leaseholder has replied. This could be both time consuming and costly –  but any other approach may end up being even more so, as this landlord found out.

If you are unsure about serving notices on leaseholders, or have a query about any other legal aspect of residential leasehold, contact our property law specialists at Ringley Law. Our experienced team can help.

Balcony fires – don’t take the risk

Is your balcony a fire risk? Following the fire in June that raced through a block in Barking via wooden-clad balconies, the government now has an advice note to block owners and residents. Balconies must not compromise resident safety by providing a means of external fire spread, it says.  Balconies must be included in fire risk assessments. If they contain combustible material then they should be removed and replaced.

Don’t try this at home…

So building owners need to understand the materials used in the construction of balconies on their blocks. This way they will be able to assess whether adequate fire protection is in place to resist a fire spreading both across and through the external wall.  But owners aren’t necessarily either fire or construction experts. So if there is any doubt over the materials used or the risk presented, they should seek professional advice from a fire safety specialist.

Revisions to the Building Regulations introduced in December address the risks posed by balconies. The new regulations require balconies on residential buildings over 18m high to be made of non-combustible materials. But balconies on existing blocks like the one in Barking, may be made from combustible materials, so it is vital for building owners to do their homework properly.

Property managers can play their part by setting out a few simple rules stating what can and cannot be stored and used on balconies by residents. Here’s our advice:

  • Don’t use balconies as storage areas – particularly for anything that might be flammable.
  • If balconies are used as smoking areas, make sure that cigarettes are properly extinguished and disposed of. The same goes for candles.
  • And most important of all, never barbeque on your balcony. A significant number of fires in flats start this way. Not only is it clearly dangerous but your block insurer will take a very dim view of any claim for fire damage resulting from an out-of-control barbeque.

Make sure residents know what is and isn’t acceptable – and why. Use the block newsletter, website, the AGM or a social get-together to drive this message home. And don’t forget anyone sub-letting. It could save a life.

How to lease: will the new guide help homebuyers?

A new How to Lease guide for homebuyers, produced by the government, is out now. The leaflet follows a similar format to the How to Rent guide for tenants, explaining the ins and outs of leasehold in a clear, accessible way.

How many times have we all heard leaseholders who have run into problems with their freeholder or their lease, saying they didn’t understand the implications of buying a leasehold property? It happens all the time. Leasehold tenure is complicated and anything that can be done to make it easier to grasp, must be a step in the right direction.

A new guide for leaseholders – will it make an impact?

The Institute of Residential Property Management points out today that under the Consumer Protection Regulations 2008, the government has the power to ensure that basic leasehold terms are included in estate agency sales information. The National Trading Standards Estate Agency Team has a consumer guide for potential buyers confirming that the main terms of the lease are “material information” that “would affect the transactional decision of the average consumer”. It stop short of saying the same to estate agents and the IRPM is lobbying government to ensure that buyers are given this information up front.

“This would mean that buyers would know what they are buying and mortgage valuers would be able to value the property on its true lease terms,” says the IRPM. The professional body is also working with lenders and surveyors to push for this transparency in the home sales process, with support from NAEA Propertymark. Sadly, to-date, the IRPM sees little improvement in the information that estate agents provide to buyers.

So will the How to Lease guide help? If it is to make any real impact, estate agents must be instructed to give the guide to ALL prospective leaseholders with the understanding that they take the time to read it. Ideally, they will talk buyers carefully through the key points. The guide is only worthwhile if they are able to discuss any issues they have with either their estate agent, their solicitor or both – and receive properly informed responses to their questions.