New building regulations are coming your way

The government is expected to publish draft legislation to deliver new post-Grenfell building regulations by the end of this month. The aim is to ensure that all new buildings, including high-rise blocks, are built to robust fire and life safety standards, reducing the possibility of a repeat of the 2017 tragedy. We hear the new regime could be in place by 2021.

According to press reports, the government is likely to set out proposals for new legislation before the end of May and, according to Inside Housing, certainly before 14 June – the second anniversary of the Grenfell Tower fire. The consultation period on these ideas will probably last around eight weeks.

The proposals will be based on recommendations set out in Dame Judith Hackitt’s review of the building regulations, which was carried out last year, and it is likely that included in the new regime will be:

  • a designated ‘dutyholder’ in every building, who will take on new responsibilities for building safety;
  • A new regulator will be set up to take responsibility for building safety; and
  • Changes to the current rules around building control. These may make it impossible for developers to choose their own building control regulator as they can under the existing regime.

The government is also expected to consult on ways to better engage residents in decisions about their building and address their safety concerns.

The proposal that will have the biggest impact on flat owners and their property managers is the introduction of the role of ‘dutyholder’ or in other words, a building safety manager. Block managers already carry responsibility for health & safety but Dame Judith wants a named individual to be held responsible for the safety of a building and its residents. This could be a property/building manager, a separate specialist or even – with the right training – an RMC or RTMCo director. Until the consultation is published, it is impossible to second guess the way this will go. But one thing is certain, fire and life safety is right at the top of the housing agenda. Whether block managers are in the frame themselves or will be responsible for working with another specialist, they must ensure their skills are bang up-to-date because residents will want to know they are up to the job.

Dangerous cladding will be replaced on private blocks – at last


Dangerous ACM cladding like the type used on Grenfell Tower is finally to be replaced on private blocks

Leaseholders in the 156 private blocks around the country with dangerous Grenfell-style cladding, received the good news last week that the government is to stump up £200 million to pay for it to be replaced. Building owners now have three months to access the fund. The row over who should pay for new cladding on private blocks has rumbled on for almost two years, since the Grenfell fire in June 2017 revealed the fatal flaws of ACM coverings on high rise blocks.

What it also revealed – to the public as well as to those already in the know – is the conundrum at the heart of leasehold: which is that he who pays the piper, doesn’t necessarily call the tune. Or in other words, the flat owners who pay the service charge are not always involved in the decisions that are taken about their blocks. This frequently applies as much to the placement of insurance and the appointment of maintenance contractors as it does to decisions around the specification of building materials. However, flat owners are not building experts. They have to rely on their property managers to do the right thing and involve residents in decision making wherever possible. It is important that they communicate the thinking behind the choices that are made, in order to ensure the best outcomes for residents as well as landlords.

When it comes to cladding – and other major building components – neither property managers nor residents have an input first time round. Those decisions are down to architects and developers who, in turn, must adhere to the building regulations. The choice of replacement cladding will now be under scrutiny from all sides and the government has already told the leasehold sector that the funding announced last week is “a one-time only offer”.  At the last count, there were 156 private blocks around the country still in need of remediation. With £200 million on offer, it’s not hard to do the maths. Price, as always, will be a factor in determining which products are most appropriate.

The other interesting point to note is that buried in the small print of the government’s statement are these words: “As a condition of funding, we will require the building owner to take reasonable steps to recover the costs from those responsible for the presence of the unsafe cladding”. So watch this space – this story isn’t over yet.

Solving the block safety conundrum

 

Safety is, of course, a key aspect of block management. But who should be responsible for ensuring the safety of residents? In the wake of the tragic fire at Grenfell Tower in 2017, Dame Judith Hackitt was asked to carry out a review of the building regulations, putting safety firmly in the spotlight.

Sounds simple? It isn’t, as Andrew Bulmer, the CEO of the Institute of Residential Property Management pointed out in an article earlier this week.

Dame Judith Hackitt, chaired the Independent Review of Building Regulations and Fire Safety set up following the Grenfell Tower tragedy
Dame Judith Hackitt chaired the Independent Review of Building Regulations and Fire Safety set up following the Grenfell Tower tragedy

In her final report, Dame Judith proposes a named individual – a ‘dutyholder’ – should be ultimately responsible for the safety of a building. So far so good. That person should be the owner, she suggests. Holding someone to account seems sensible, so what’s the problem?

The difficulty with Dame Judith’s plan is the complexity of our leasehold system, with its matrix of different roles and responsibilities.

As Andrew explains, when the freehold is owned by the leaseholders or commonholders (see my 20th December blog on commonhold reform) through a vehicle such as a Residents Management Company, or Right to Manage Company, that means one of the resident directors will have to stand forward as the ‘dutyholder’ for the safety of the block.  The day-to-day responsibilities of the safe management of the building may be subcontracted to an agent but that dutyholder is ultimately responsible and could end up in jail if it all goes wrong.

Andrew foresees what he politely describes as “ lively” residents’ meetings as the directors try to decide between them who is prepared to take on that responsibility, or when the developer tries to hand over the completed site to the residents.

Yesterday, I wrote about Lord Best’s working group, which the IRPM sits on. The organisation has highlighted this ‘dutyholder’ conundrum and the leasehold reform team at the Ministry of Housing Communities and Local Government  is trying to find a way forward.  Any overhaul of a longstanding system is complex and “carries significant risk of unintended consequences,” says Andrew. He doesn’t envy the MHCLG in their task – and nor do I.

I have returned regularly to leasehold reform in this blog. Today’s post illustrates yet again why that reform is so badly needed and why the debate over it could go on for some time

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Property agents in the spotlight

 

Leasehold reform is badly needed to protect the public from rogue operators and to promote the reputation of professional property agents. After years of being deaf to the sector’s  problems, government is now listening and has set up working groups to look at the key issues.

Property agents could soon be working with a brand new set of rules.
Property agents could soon be working with a brand new set of rules.

The framework within which all property agents work is one of the areas being considered and block management is on the Government’s agenda. At the moment, anyone can set up in business as a property manager. You need no professionally-recognised qualifications and there is no industry-wide code of practice to safeguard residents. Chartered surveyors working as property managers are governed by the Royal Institution of Chartered Surveyor’s professional standards. In this way they maintain their reputation and protect their clients’ interests. Property management companies which are members of the Association of Residential Managing Agents (ARMA) must meet their trade body’s quality benchmark or risk losing their ARMA member status. And the Institute of Residential Property Management qualifies property managers to a standard that most employers recognise and respect. But there is no legislation in place to back best practice across the board and the sector is open to potential abuse.

All this could be about to change – for the better we hope. The Government has set up a Regulation of Property Agents working group chaired by Lord Best. It aims to come up with recommendations on mandatory qualifications, a code of practice and regulation of residential property agents, across sales, lettings and block management. The aim is for this new regime to be consistent across the whole sector. it would mean tenants, homebuyers and sellers could be confident they are getting a professional service from their property agents – and are being charged fairly for it.

The group will report back to government this summer, but it could be some time before new legislation – if this is the recommendation – is fleshed out and put to Parliament. So, in the meantime,  if you are responsible for appointing a property manager for your block, what should you look out for?

Well, qualifications are a good start. Using an ARMA member firm or one that employs RICS or IRPM-qualified staff (or both) ensures you have some comeback if your property manager doesn’t perform. ARMA and the RICS both enforce a complaints system on their members and the organisations themselves deal with problem members.

The other important aspect is experience. Does the property manager you are considering have other blocks on their books that are similar to yours? If so, contact their residents’ association if they have one, or try and find a friendly flat owner or renter who you can talk to. Find out if they are satisfied with the company’s performance.

Property management is a people business, so interiew several potential firms to find one you and your fellow residents will feel confident and comfortable working with. And finally, resist the temptation to go for the cheapest fee. Your block manager will be looking after your biggest asset – your home – so make sure he or she is properly qualified and will deliver the level of service you expect.

Rent control – do we really need it?

Every so often the thorny issue of rent control raises its head. Rent control was in the Labour Party’s 2017 election manifesto and it has the backing of London Mayor Sadiq Khan. The Mayor has now said he intends to outline a plan for stabilising and controlling rents for the 2.4 million renters now living in the capital. The London Mayor’s powers don’t extend to bringing in rent control across the city but he has said he will campaign for it and lobby the Government for his proposals to be accepted.

Rents in London are extremely high as a percentage of earnings compared to other parts of the country and private rents rose on average by a whopping 38% between 2005 and 2016. According to Mr Khan the arguments for rent control are “overwhelming” and it is vital the Government acts to improve the quality of millions of lives. Londoners seem to agree with him. A recent survey confirmed that 68% of Londoners were in favour of capping the amount private landlords could charge tenants. But is rent control really the answer to renters’ problems?

Rent control: could it be coming your way?
Rent control: could it be coming your way?

The argument against capping rental levels has always been that it will impact supply as landlords, unable to make a profit, take their properties off the market. As the majority of private landlords only own one property this is a distinct possibility, especially as higher taxes are already eating away at profitibility in the buy-to-rent market. This would certainly add to the problems tenants already have in finding a suitable home to rent. Build to rent developers may also take a step back from the London market if they can’t make the figures add up on new developments. However, the rental market’s loss could be the housebuyer’s gain if there is a sudden flood of former rental housing onto the market.

In other major cities such as New York and Berlin, rent control has been in place for decades. The lesson to learn from the experience in these markets is that in tandem with bringing in rent control, it is important to provide a supply of social housing to mop up the shortfall in private rentals when some landlords, inevitably, decide to quit the market.

Mr Khan has invited Karen Buck, the MP behind the Homes (Fitness for Habitation) Bill, to work with James Murray, the deputy mayor for housing and residential development, to work up proposals for future rent control laws. This is clearly not as straightforward as it may at first appear and the additional social housing that Sadiq Khan has also pledged to provide for London must be brought into the mix, otherwise rent control could be completely self-defeating and simply hurt the people it is intended to support.

So will London follow the lead of other major cities around the world and become the first place in the UK to enforce a rental cap? Watch this space – the next few years could be interesting.

Guaranteed for renters – a home fit to live in

The government aims to ensure a decent home for renters is guaranteed as part of the new Homes (Fitness for Human Habitation) Act. A Private Members’ Bill allowing tenants to sue over the condition of their rental properties completed its paslawsage through Parliament just before Christmas and will become law on 21 March.

The new Act makes changes to the Landlord and Tenant Act 1985, and the Building Act 1984. So what does it mean? Well, from the date the new Act comes into force, all landlords in the social and private sectors must ensure that their property is fit for human habitation at the beginning of the tenancy and stays that way – essentially  guaranteeing that their rented home is fit for purpose. Where this is not the case, tenants will have the right to take legal action for breach of contract on the grounds that the property is unfit to live in. The new Act only applies to tenancies in England. The Welsh Government has already included similar rights for tenants in the Renting Homes (Wales) Act 2016.

The Residential Landlords Association and National Association of Landlords are backing the changes set out in the new Act but some individual landlords are not so keen. They are worried that the new law could mean tenants refusing to pay rent until the freeholder carries out repairs, etc. leading to landlords getting caught up in costly litigation while rogue tenants are given free rein to cause damage.

A simple way to get around this issue is to carry out regular inspections and ensure tenants sign these off every time. Any damage caused can then be noted and a paper trail created that can be used by both sides to prove that what should have been actioned has been done and the tenant charged for repairs where appropriate.

In fact, where not carrying out repairs counts as a breach of contract, tenants have had the right to take their landlord to court since 2015 under the Consumer Rights Act, so that hasn’t really changed. What is new though, is that what defines  ‘fit for habitation’ is now enshrined in law over and above the existing ‘hazards’ that are listed in the Housing Health and Safety Rating System. This is already used by local authorities to ensure that rented housing is of an acceptable level. At the end of the day responsible landlords have nothing to fear from the new Act – after all, any property that is let should automatically be guaranteed to be of an acceptable standard.

As part of a bigger package of reforms that tackles housing problems, the government has also announced  a new Housing Complaint Resolution Service. This guarantees protection for homeowners as well as tenants and gives them a single point of contact to sort out disputes over repairs and maintenance. All private landlords must sign up to the new scheme. If they don’t they could face fines of up to to £5,000. A new Home Ombudsman is also on the cards, so watch this space. All good news for renters and flat owners we think.

Discover more about renting – it’s worth the effort.

informationDiscover more about renting – it could pay dividends. TotallyMoney’s Mark Moloney recently told Letting Agent Today that knowing your rights and being able to keep an eye out for warning signs means you’re well prepared in the event of an issue or a dispute.

We agree 100%. At Ringley we are fully committed to helping our clients and their residents stay as well informed as possible but we weren’t entirely surprised to read that a recent survey carried out by the credit report website revealed that tenants know a lot less than they should about the rental sector. This is also a problem among long leaseholders. In many cases, tenants and flat owners know very little about their rights and responsibilities.

According to TotallyMoney, a staggering 97% of renters do not know their full rights, while 50% don’t know if their landlord could change their rent without notifying them. Perhaps more worrying is that 38% of people renting a house or flat don’t know when the landlord is allowed to enter the property.

And it’s not just tenants who don’t have as much information at their fingertips as they need. Some landlords aren’t very well informed either. The most searched questions landlords  regularly ask online are pretty basic and include:

  • how long does a landlord have to return a deposit?
  • who pays council tax, the tenant or the landlord?
  • what does landlord insurance cover?

Our website at www.ringley.co.uk is packed with useful information. Need to know more about block management? Are you thinking of buying or extending your lease? Interested in right to manage or build to rent? Need legal or financial advice? Whether you are a tenant, a landlord or a developer, we have something for you.   We have teams of block managers, legal specialists, surveyors, engineers and finance professionals with experience of just about everything you can think of that’s related to property. And if you can’t find what you’re looking for online, one of our experts will be able to answer your questions or point you in the right direction. Just give us a call. We’re always here to help.

Could commonhold finally catch on?

 

Do you know what commonhold is? If you don’t, you’re not alone. Fewer than 20 commonhold developments have been created since the Commonhold and Leasehold Reform Act 2002 came into focommonholdrce in 2004.

Unlike leasehold, commonhold allows a person to own a freehold ‘unit’ (their flat) outright and at the same time become a member of the company which manages the communal areas and buildings. There is no landlord, no ground rents and no time-limited, depreciating asset. This sounds like a great improvement on the complex and tricky to navigate leasehold system, so why has commonhold proved so unpopular?

Earlier this year, when asked for comment on commonhold, Peter Haler, a former CEO of LEASE, explained that the 2002 Act was badly conceived from the start. “It was so badly done it makes the Dangerous Dogs Act look like English literature,” he said. Peter believes the Act as it exists today is not fit for purpose and is not fixable: “proper reform is needed.” He said.

The government agrees.  As a result, the Law Commission has been tasked with proposing reforms to revitalise commonhold as a workable alternative to leasehold, for both existing and new homes and is now trying to find out which aspects of the law of commonhold have made it so unpopular.

A Call for Evidence, published in February, highlighted some issues with commonhold as it stands, which are making it unattractive to homeowners and to the property sector as a whole. Following up on this, a consultation paper titled: Reinvigorating commonhold: the alternative to leasehold ownership, has now been published.

It sets out a range of proposals aimed at making commonhold work better. These  include:

  • Enabling commonhold to be used for larger, mixed-use developments which accommodate not only residential properties but also shops, restaurants and leisure facilities.
  • Allowing shared ownership leases and other forms of affordable housing to be included within commonhold.
  • Making it easier for existing leaseholders to convert to commonhold and gain greater control over their properties.
  • Improving mortgage lenders’ confidence in commonhold to increase the choice of financing available for home buyers.
  • Providing homeowners with a greater say in how the costs of running their commonhold are met.
  • Enabling homeowners to end unattractive long-term contracts imposed by developers.

To read the proposals in full go to  https://consult.justice.gov.uk/law-commission/commonhold/ and if you feel strongly about the issues raised you can respond using the online form.

The consultation period is open until 10 March 2019 and the Law Commission expects to publish its final report during the course of the year.

Right to rent: unfair to landlords and tenants?

passportShould landlords be expected to act as border control officials when renting to a new tenant? This is the question that a Judicial Review of the government’s controversial Right to Rent policy, which obliges landlords to undertake immigration checks on prospective tenants, will be asking as it gets underway today.

The Right to Rent scheme was rolled out nationwide in 2016, meaning that landlords must now check the immigration status of would-be tenants. Understandably, this initiative has proved really unpopular. Landlords are already under pressure from government (see my blog Landlords under fire, posted on 11 December) and certainly don’t want to take on responsibility for ensuring that tenants have a legitimate right to rent a home.

When the scheme came into effect, the Joint Council for the Welfare of Immigrants (JCWI) thought it was so potentially discriminatory that it put forward – and won – a legal challenge, gaining the right to launch a High Court case against the Home Office. As I write this blog, a full hearing is taking place before the High Court today and tomorrow.

The JCWI’s legal challenge is being supported by the Residential Landlords Association (RLA) which has carried out research among landlords to find out how they feel about the scheme. The RLA found that, as a result of the Right to Rent policy, 44%  are now less likely to rent to someone without a British passport , mainly because they are scared they may be prosecuted if they get something wrong. Landlords also say that, as a result of Brexit and the continuing uncertainty around the future status of EU nationals in Britain, they are now less likely to rent property to anyone from the EU or the European Economic Area.

According to Landlord Today, the RLA is calling for Right to Rent to be scrapped, arguing that it discriminates against those unable to easily prove their identity and foreign-born nationals who have documents unfamiliar to landlords. It is also calling for urgent guidance for landlords to be issued by the government, explaining clearly the rights of EU citizens to rent property, especially in the case of a no-deal Brexit.

The whole situation is reminiscent of the Windrush scandal that came to light earlier this year. Landlords are not government officials and shouldn’t be expected to act on behalf of the Home Office or to make a judgement call around who is and isn’t legally entitled to rent a property. Landlords are under enough pressure from excessive taxation and a new raft of regulations without being expected to act as immigration officers too.

Brexit: what’s the impact on property?

BrexitHarold Wilson, who delivered the UK’s first European referendum in 1975, said a week is a long time in politics. This week, Brexit has been the only story in town.

In October, Zoopla reported that the impact of Brexit “…has been limited so far”. Housing fundamentals such as affordability, tax changes and mortgage regulation were thought to be the main factors of the slowdown in London – where average prices are falling by 0.4% –  and the Brexit vote has been a compounding factor, said the online property portal.

However, continuing uncertainty created by the Brexit process is now starting to take its toll. According to the latest RICS Residential Market Survey, this is causing both buyers and sellers to sit tight in increasing numbers.

The results from the latest survey show a weaker trend in sales than in previous months, with the headline indicators for demand and supply falling once again. Almost half of the agents responding to the survey blame the political uncertainty around Brexit for people’s reluctance to either put their home on the market or take out a new mortgage.

The lack of new stock coming onto the market means that agents are reporting only having, on average, 42.1 homes for sale and the number of valuations is also down in comparison to this time last year. With little choice for new buyers and fewer people interested in moving, the number of agreed sales fell in November.

Caution is now clearly visible among both buyers and sellers, says RICS chief economist Simon Rubinsohn, and where deals are being done, they are taking longer to complete. The worry now is that this uncertainty may spill over into the development pipeline, making it even harder to secure the uplift in construction that is so badly needed to address the housing crisis.

So much for the big picture, but what about the story closer to home? Fewer than 20 weeks are left to arrange the UK’s departure from the EU and businesses around the country are having to consider what they may need to do after 29 March next year.

According to a new report aimed at British business from lawyers CMS, Ready for Brexit?, only 22% of large businesses are well prepared. Another 11% expect to prepare but haven’t started yet and just 59% of small businesses expect to make any preparations for a chaotic exit from the EU.

It is easy to assume that Brexit will have little impact on the way letting and managing agents run their businesses. After all, we have nothing to import or export. The regulations we adhere to may change but that won’t happen overnight. However, Brexit may well impact the people we employ. There has been a lot of talk around recruiting British workers after Brexit.  At Ringley we have a proactive recruitment and training policy and are an Ambassador for Apprenticeships. We are passionate about training staff in-house and, regardless of the way Brexit pans out, we will continue to recruit staff who fit our company culture and develop our people in order to deliver the very best service to our clients.