Could commonhold solve the costs conundrum?

“Two years after Grenfell and this building is still covered in dangerous cladding.” This message was projected onto a tower block in Salford this week to draw attention to the second anniversary of the fire which tragically took the lives of 72 people and had devastating consequences for many others. Yesterday at a major property conference held in London, more than 750 block managers stood for a minute’s silence to remember the victims of the fire, who died two years ago today. Many others were directly impacted by the failings of the property industry and those who regulate it.

Two years to the day since Grenfell and the cladding scandal rumbles on

A fitting tribute to those who died would be for the government to say that all dangerous cladding has been replaced across the country. This is not the case. Removing and replacing Grenfell-style and other flammable cladding has been much too slow. The whole exercise has become tied up in knots as the industry tries to work out who should pay for the work. The government has finally come up with funding to help get the job done but the problem at the heart of the cladding scandal – for private blocks at least – is the leasehold system itself.

Owners of leasehold buildings are not legally responsible for paying to replace dangerous building products with a safe alternative. This falls into the category of repairs and maintenance, which leaseholders must pay for via the service charge. Many current owners have bought blocks from the original developer several years down the line. They weren’t involved in the original specification or the build. Institutional investors own large portfolios of residential blocks, many of which may have changed hands several times. Hence the endless arguments and delays that have dogged the sector post-Grenfell. Leaseholders may hold the moral high ground but they are still obliged to foot the bill. Some building owners have taken the decision to do the decent thing and pay up. Many are still fighting their corner.

But there may be a glimmer of hope on the horizon. The Law Commission is supporting the expansion of commonhold as an alternative to the antiquated and often unfair leasehold system. Adopting commonhold would mean developers selling flats outright rather than maintaining their interest in the building or selling it on. The residents form a commonhold company and all responsibility for operation and maintenance of their block is in their hands alone. No more division between owners and residents and total transparency around costs.

In tandem with the government’s plans for a new, enforceable building safety regime in residential blocks, this could make all the difference. It won’t help those who have had to resort to projecting slogans onto their blocks to raise awareness of their plight, but could it work for future flat owners? We will have to wait and see.

Has leasehold backfired on you?

Yesterday the Competition and Markets Authority (CMA) launched an investigation to find out whether people are being treated fairly when buying their home. It hopes to identifying potential breaches of consumer protection law in the leasehold housing market.

Ongoing concerns about the fairness of some leasehold contract terms have turned the spotlight on the sector, with the press frequently reporting on people being stung by costly fees over a long period or finding themselves unable to sell their homes due to onerous lease terms.

In response, the CMA will be looking at two key areas:

Potential mis-selling: have people who have bought a leasehold property been given the information they need to fully understand what they are taking on? This might include, for example, the requirement to pay ground rent over a certain period of time, or whether they have an accurate understanding of how they can buy their freehold.

Potential unfair terms: are people having to pay excessive fees due to unfair contract terms? This will include administration, service, and ‘permission’ charges – where homeowners must pay freeholders and managing agents before they can make home improvements – and ground rents, which in some cases can double every 10 years.

The CMA is writing to developers, lenders and freeholders asking them to help the consumer authority understand more about how leaseholds are sold and managed, and the terms their contracts contain. The CMA also wants to understand the impact of this on homeowners. So it is calling on people to share any experiences that may be relevant.

If the CMA thinks that a company’s practices are misleading – or that its contracts contain unfair clauses – it could take action to force that company to change how they operate. Responses are needed by 12 July, so if you would like to share your experience of the leasehold market, click here to find out how to have your say.

What should be the new PM’s property priorities?

The names are in. Theresa May stepped down as the UK Prime Minister on 7 June and 10 MPs are now in the running to be the next leader of the Conservative party. These include a couple with housing credentials: ex-housing secretary Sajid Javid and ex-housing minister Dominic Raab.

So what do people want to see for the property industry from the new PM and his or her new cabinet? Kevin Hollinrake, Conservative MP for Thirsk and Malton, told the press that he is backing Michael Gove for the leadership. He said that the new Prime Minister needs to take a more interventionist approach to housing. And Conservative Lord Gary Porter, said that finishing off reforms to the Right to Buy is “top of his list” of priorities. He said it is crucial that Right to Buy discounts stimulate demand, and that capital receipts are kept by councils and reinvested in stock.

At Ringley we have our own wish list – and a few questions that we would like to see answered once the new PM is in place.

Do London and the South East have lessons to learn from the successful delivery of build to rent in the north of England?

First, we would like to know why Build to Rent is being most successfully delivered in the north of England? This is great news for northern towns and cities but we’d also like to see the government coming up with an effective policy to resolve housing affordability issues in London and the South East.

Also tied to affordability, we would like to see some thought given to whether space planning for residential property should be based on floor plates or volumetric planning?  This would allow for smaller, cheaper units but could include sleeping decks and other imaginative solutions to maximise the use of space. We would also love to see a new planning blueprint for high streets, so that we get uniformity in change of use, not the existing mess of different rules that effectively devalues properties.

Beyond property, other key priorities as we see it, are to:

  • create care incentives for families to take more responsibility for looking after their own elderly relations;
  • shorten degrees to a standard two years not three, to make higher education more affordable and get people work ready; and
  • increase the flexibility of apprenticeships and enable them to start on a one-day-per-week basis from age 14 for those not taking 8+ GCSEs, so that young people are work ready, not work shy.

We would also like to see more employers encouraged to take on apprentices as we do at Ringley.

These are some of the areas we would like the government to pay attention to but we’d love to hear your ideas too, so please leave a comment below.


Building safety back in the spotlight

Once again a residential block has gone up in flames. This time – thankfully – no one was killed. But it took 100 firefighters and 15 fire engines from the London Fire Brigade to get the huge blaze, at a block in Barking, under control. It seems that wooden balconies – which residents had previously raised concerns about – were responsible for spreading the fire at a terrifying speed and, once again, questions are being asked about the safety of construction materials and the way they are used on residential buildings.

Reform of the building safety regime is out for consultation.

So it seems ironic that on Friday the government published its new consultation Building a safer future: proposals for reform of the building safety regulatory system. The document follows up on the recommendations made by Dame Judith Hackitt’s independent Review of Building Regulations and Fire Safety and looks for ways to make buildings safer for residents.

Five key areas are up for discussion:

  • Scope for a new building safety regime which goes further than Dame Judith recommended, covering all multi-occupied residential buildings of 18 metres or more;
  • The concept of ‘dutyholders’, who will have clear responsibilities for building design, construction and occupation;
  • Proposals to ensure that residents are given better information about their buildings so they can take part in decisions about safety, and have clear and quick routes of escalation for their concerns if they are not addressed;
  • Plans for a new building safety regulator; and
  • Proposals to strengthen regulation of construction products.

The proposed system will be underpinned by strengthened enforcement and sanctions and, where necessary, effective punishments for non-compliance.

This is all too little, too late for residents of the Barking block who will need rehousing until their homes can be brought back into a habitable state. But this fire highlights once again the holes that exist in our building safety regime. It is vitally important that the whole issue is closely scrutinised and that effective improvements are made. So if you want to have your say and respond to the consultation, you can read the document in full and complete the online survey at https://bit.ly/2Wt1vIb You have until the end of July to make your voice heard.

How to sell your flat – fast!

If you want to sell your flat but it feels as if it’s taking forever, you’re not alone. New research from Rightmove found that more than a quarter of properties currently for sale have been on the market for at least six months. Stamp Duty changes, mortgage restrictions and high prices, to say nothing of Brexit uncertainty, are making the market sluggish.

Want to sell your flat? Rightmove has some tips for a quick sale.

The property website found that 28% of properties have been on its books for six months or more, while 8% of properties have been listed for at least a year. So if you can’t sell your flat, then overall demand in your area could be low due to local market conditions. However, if other flats are selling and yours isn’t, Rightmove’s Miles Shipside says you either have a property with limited appeal or the price is too high.

So before you give up and take your flat off the market, here are eight tips from Miles to give your home that all-important kerb appeal and sell your flat – fast. 

Don’t rush to put your home on the market –The majority of properties will receive 70% of interest in the first two weeks, so know who you want to sell to and make sure you have at least five good quality photos, a floor-plan and a carefully written description of the property before it is listed.

Give the best first impression – First impressions really can make or break a deal. Anyone coming to the door will make an initial assessment before they’ve even walked inside. So if the exterior of your block or the common areas are due for a fresh coat of paint, wait before putting your flat on the market.

Use the professionals – Don’t just take a few snaps on your phone. If you’re able to use a photographer, or your agent can offer one to take pictures of your home, then take the opportunity to make sure buyers looking online or in estate agents’ windows see your flat at its best.

Clear the clutter – Help buyers picture themselves living in your home. That’s hard to do if your possessions are everywhere, so de-clutter your flat and let potential buyers imagine themselves making it their own.

Hide the litter tray – Pets and property viewings are not always a good  mix. So make sure yours are out of sight when potential buyers are around.

Listen to advice –Estate agents may not give you the advice you want to hear when you’re preparing your home for sale, but it may be the advice you need.

DIY viewings aren’t always the best option – It can sometimes be hard to have the owner in the property when buyers are taking a look around. It may be better to go out and leave your agent to it. After all, that’s what you’re paying them for.

Plan your price – Researching how much you can reasonably expect for a flat in your area, pricing your home competitively and being prepared to negotiate is more likely to shift the odds of selling in your favour.

And finally, a tip from Ringley. A great property manager makes all the difference to how happy your buyer’s block living experience will be, so don’t forget to give us a mention if you’re happy with our service. It could make all the difference.

Good luck!

Fees ban – the unintended consequences

The Tenant Fees Act came into effect in England on Saturday and there are already big question marks hanging over the new legislation. Both the government and the lettings industry want to make renting fair for tenants but agents are not convinced the new Act will work in the way that was intended.

What’s the impact?

Glynis Frew, the CEO of letting agent Hunters, said this week that good intentions could easily result in unintended consequences. We agree that a small number of rogue agents and landlords have charged what she describes as “mind-boggling” fees, but this isn’t representative of the industry as a whole. Instead of government opting to cap fees, they have been scrapped altogether. The likely results are rent increases, landlords leaving the sector in even greater numbers than they are already and letting agents shutting up shop – which as well as reducing consumer choice, also has a negative impact on our beleaguered high streets.

Our view is that the Act will mean agents looking closely at their all-inclusive management fees and having to pass on disbursements such as deposit registration costs to landlords. The industry will be looking to push extra products such as insurances, on which agents can take commissions to cover the shortfall in income. 

New fines for ‘prohibited’ payments

Local authorities, charged with enforcing the legislation, can fine landlords and agents up to £5,000 for levying a payment that is now prohibited (see yesterday’s blog at https://blog.planetrent.co.uk/tenant-fees-act-now-in-force/ for a list of allowable fees) and they can prosecute or impose a fine of up to £30,000 if an ‘offence’ under the Act has been committed. This is where a landlord or agent has been fined or convicted for a breach within the last five years and commits a further different breach.

Being a landlord has never been more precarious.  Reducing deposits from 6 weeks to 5 is no real protection against tenants not paying their last month’s rent and the Deposit Alternative products that are now springing up may offer landlords more protection but are of course optional, and cannot be forced on tenants.   Flexibility as to how tenants make payments is also diminishing as many landlords refuse to take rent or deposit payments by credit card as, understandably, they don’t want to pay the fees.

Future challenge

The challenge for agents will be to ensure they are providing an added-value service to landlords by having effective tenant referencing, contractual and deposit systems in place as well as ensuring compliance with the new Act.

Access all areas?

Most residential leases include a clause that allows landlords access to flats, if it is for one of the reasons laid down 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.

The terms of the lease in question allowed the landlord access as long as the flat owner was given at least 48 hours’ notice. However, when the landlord gave a time and date to inspect the 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, there was no reply.

The landlord took the case to the First Tier Tribunal, arguing that the leaseholder’s failure to answer his letters was a breach of covenant. However the FTT disagreed and ruled against the landlord. The reason given was that the lease did not specify that the landlord could only gain access after gaining confirmation that the time and date given was acceptable.

The landlord then appealed but the appeal failed too. Again, the reasoning was that 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 be learned here. First, when landlords want to access a property, they must think hard about the wording of the notice they issue.

And second, when access is required – and is acceptable under the lease terms – it seems that landlords should go ahead and try to gain entry on the time and date specified in the notice, regardless of whether or not they have received a response from the leaseholder. This is potentially time-consuming but any other approach may end up being even more so, as this landlord found out.

At Ringley we have our own in-house legal department. Our qualified specialists are always on hand to offer advice and help you navigate the complexities of leasehold law. So if you have any questions relating to your lease or any other legal matters, contact us at http://www.ringleylaw.co.uk

Right to rent update

Earlier this month, the Government issued new guidance on right to rent checks post-Brexit. Like most things Brexit-related, there has been a lot of uncertainty about what will happen next. Landlords and lettings agents are rightly confused as to what their rights and responsibilities will be once the UK leaves the EU later this year. In response, the Home Office has now confirmed that there will be no changes made to existing legislation until 1 January 2021.

Under the law as it stands, anyone letting a property must check that prospective tenants have the legal right to rent a home before a new tenancy agreement is signed.

Until 1 January 2021 EU, EEA and Swiss citizens will continue to be able to prove their right to rent in the UK as they do now, for example by showing their passport or national identity card.

There will be no change to the way EU, EEA and Swiss citizens prove their right to rent until 1 January 2021. This remains the same if the UK leaves the EU with or without a deal. Letting agents and landlords do not need to check if new EEA and Swiss tenants arrived before or after the UK left the EU, or if they have status under the EU Settlement Scheme or European temporary leave to remain. Nor will they need to retrospectively check the status of EU, EEA or Swiss tenants or their family members who entered into a tenancy agreement before 1 January 2021.

Irish citizens will continue to have the right to rent in the UK and prove their right to rent as they do now, for example by using their passport.

However, the Home Office states that letting agents and landlords should continue to conduct right to rent checks on all prospective tenants to comply with the Code of practice on illegal immigrants and private rented accommodation and the Code of practice for landlords: avoiding unlawful discrimination.

As is currently the case, in order for a landlord to obtain a statutory excuse from a civil penalty when letting to the non-EEA family member of an EU, EEA or Swiss citizen, the prospective tenant will need to show Home Office issued documentation as set out in the legislation and guidance.

So watch out for new guidance on how to carry out right to rent checks from 1 January 2021, which will be published in due course. In the meantime, go to the government website at gov.uk which has plenty of useful links and more information on right to rent checks.

Section 21: Finding the right balance

With the introduction of more regulation, reductions in tax relief on mortgage interest and 3% Stamp Duty on buy-to-let properties, landlords are really under pressure. Add Section 21 changes into the mix and there is a real risk that, having lit the touch paper, all the government has to do is stand well back and watch the rental market go down in flames.

This may be an exaggeration but according to a recent survey carried out by Landlord Action and reported in yesterday’s Landlord Today, more than a third (38%) of buy-to-let landlords will consider offloading properties if the government axes Section 21 ‘no fault’ evictions. A further 33% said they would only continue being a landlord if “significant changes” are made  to Section 8.

The study also found that 70% of landlords would be less willing to consider a longer-term tenancy if Section 21 was no longer available to them, while 85% said they would be more selective with their choice of tenant. 

This is serious. The government is attempting to reform the private rental sector to help tenants but is running the risk of alienating the very landlords that people rely on to provide their homes.

In response, today there has been a new call on the government to rethink its plans to change the Section 21 eviction process. The founder of Landlord Action, Paul Shamplina, has written to housing minister Heather Wheeler, inviting her to gain a greater understanding of the possession process before making drastic reforms by attending an eviction with him.  In formulating policy and new legislation it is vitally important that any reforms present equal opportunity for everyone operating and living in the private rental sector.

With 85% of landlords telling the National Landlords Association in a recent poll that they would be unlikely to vote for any party proposing to remove Section 21, for the minister’s sake let’s hope she is in listening mode.

What will the flat of the future look like?

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Fancy a wind turbine on your roof? Well, in a few years’ time, according to Aldous Hicks from Recircle Recycling, you could be seeing them everywhere on the skyline. Climate change is making an impact on the way we live and in future we will be installing a whole range of eco-friendly devices in our homes to help reduce our carbon footprint and ramp up our ability to reduce, re-use and recycle products that we now just throw away. Here are some of Recircle’s favourites.

New storage batteries currently in development promise to unlock a range of in-home energy production methods. Batteries will then be able to store power at a local level and perhaps even distribute power across a community. But what will we use to generate power?

That could be solar tiles – which are a step up from the bulky panels we’re all familiar with because they are smaller and more flexible. They can be retrofitted onto any property with a roof, although the drawback is the low energy production they offer in less sunny countries. So in the UK, we may be stuck with solar panels for a bit longer.

Back to those wind turbines. Imagine fitting an attractive and super-efficient wind turbine on your roof that’s a piece of art as well as generating almost all the power needed. Take the Liam F1 Urban Wind Turbine from Dutch tech firm, The Archimedes, shown above. The spiral design resembles a big rotating flower. At 80% efficiency, it is a forerunner of the high-efficiency turbines of the future.

Something really exciting is the bio-fuel synthesiser. Scientists are now working with microorganisms that can break down organic material and CO2, passing the energy straight into a battery. Food waste and human excrement will feed the machine, providing energy-free sewage treatment and no need for composting. Bio-fuel synthesisers will be fitted to our toilets and waste disposal pipes, turning our organic waste into clean energy.

But what about other kinds of waste? A closed-loop economy means processing products and packaging back into their original form, or equivalent. At the moment, we can’t do this because of the high cost and low-reliability of separating out different materials for recycling.

So ReCircle is working on a home and business appliance to do this. It will use a sensor to ensure different materials are never put together. This means the inherent material value is not lost due to being mixed with other different materials – the major problem with the current recycling system.

The near-pure used-materials are washed, ground or compacted to contaminant-free sized-reduced pure products ready for storage. The pure close-loop recyclable products will then be collected on-demand from buildings when the storage containers are full.

It may even be possible to combine technologies like a recycling appliance and a 3D printer, ensuring that everything you print can be reprocessed into future ‘ink’ to make more products. Individual homes and other buildings could instantly become closed-loop in themselves.