Parties promise big on housing – but can they deliver?

Training will be vital to tackle skills shortages but more is needed if we are to solve the housing crisis

This morning the two main political parties both made election commitments to deliver much-needed housing.  Labour’s manifesto promises £75bn to deliver the biggest social housebuilding programme since the 1960s. The party has set itself the task of providing 100,000 council houses a year by 2024  – a tall order in anybody’s book.

The Conservatives are also promising major change –   announcing a number of policies alongside their million homes pledge, which includes an overhaul of the planning system.

In contrast to Labour, the Tories would not use public money to build more homes, but instead, plan to promote policies encouraging the private sector to deliver the housing stock we need. Today’s announcements included the promise of a new mortgage with long-term fixed rates and a 5% deposit to help renters get on the property ladder. They also pledged to start a new scheme giving first-time buyers a 30% discount on new homes in their area.

Yesterday, the Liberal Democrats promised to build 300,000 homes a year by 2024, including 100,000 social homes. And the Green Party manifesto also promises an extra 100,000 council houses a year.

These pledges are welcome. We are well-aware that the country faces an ongoing housing crisis with too few affordable houses and property prices putting a first home out of reach for many young people. However, the question has to be asked, how is all this to be achieved?

Labour’s Angela Rayner may have got hackles rising in the building trades this morning as she asserted that it doesn’t take long to train to be a plasterer. A six -month training course is all that’s needed, she said. This is debatable but what is certain is that the construction industry is facing serious skills shortages that are likely to get worse post-Brexit. Labour’s pledge to train more workers is one solution but it is likely to take a lot longer than six months to get boots on the ground.

Whichever party ends up forming the next government, if serious numbers of homes are to be built they will need to get to grips with not only skills shortages but with a range of other long-neglected issues. Re-skilling and streamlining planning and building control will be vital, as is a shift towards modular construction to take the heat out of those shortages and ensure quality and compliance. And new financial models and incentives are desperately needed to get developers building affordable homes.

Without attention to detail, nothing will change.

Heat networks: have your say

Do you manage a building with a communal heat network, or own a flat or a building that uses one? If so, you’re certainly not alone. Did you know there are at least 14,000 heat networks in the UK – we didn’t! These include both district heat networks which supply multiple sites and the communal heating systems that supply a number of units within a single building, with which many property managers will be familiar.

The UK is committed to achieving net-zero emissions by 2050 and heat decarbonisation is one of the biggest challenges.  The Government thinks heat networks are crucial to meeting this target because they are uniquely placed to unlock otherwise inaccessible sources of larger-scale renewable and recovered heat sources such as waste and heat from rivers and mines. In the right circumstances, heat networks can reduce bills, support local regeneration and are a cost-effective way of reducing carbon emissions from heating. 

The Government is now consulting on proposed amendments to the Heat Network (Metering and Billing) Regulations 2014 to make them more effective for suppliers and users. The current regulations set out rules around installation of heat meters and billing for customers. The meters enable suppliers to produce fair and transparent bills based on actual consumption  – and like domestic Smart Meters, they can drive energy efficiency savings and cost reductions.

In some cases, the requirement to install heat meters and heat cost allocators is subject to a ‘cost-effectiveness’ test set out in the regulations.  The consultation explains how cost-effectiveness is measured. It includes proposals to update the way it is assessed and describes how the cost-effectiveness tool for heat suppliers will be amended. The changes will affect those suppliers with buildings where a cost-effectiveness assessment is required but where, to-date, the tool has not been available.

The government also proposes to extend the provisions set out in the regulations covering meter accuracy, maintenance, and billing based on consumption to all existing metering devices. These requirements would extend the regulations to some heat suppliers who, at present, don’t have to comply.

The thinking here is that metering accuracy and maintenance, as well as billing based on consumption where cost-effective, are vital to delivery and help maximise the benefits of metering. They should therefore apply to all installed metering devices. 

Finally, the consultation contains several proposals clarifying areas where the current regulations are unclear and it includes a provision to support the enforcement of meter accuracy and maintenance.

The changes are expected to increase the number of customers with heat meters installed and the government is keen to hear from industry and from customer representatives.  If you have a view on heat networks and/or metering, you still have time to respond. The closing date has been extended from 12 December to 9 January 2020 because of the general election, so if you haven’t had the chance, take a closer look at the changes here.

HPL cladding: more questions than answers

Ringley CEO Mary-Anne Bowring will be talking about fire safety in Manchester this week

Footage from this weekend’s devastating fire at a student block in Bolton must have given the property industry a collective sense of deja vu. Thankfully, everyone was safely evacuated, but once again we watched flames rapidly spreading up the outside of a block, while its cladding melted in the heat. This time though, the cladding was HPL – not the ACM used on Grenfell Tower – and another can of worms was well and truly opened.

In the wake of the 2017 tragedy, experts warned that “the next Grenfell” would involve HPL cladding. Building owners were told to remove all cladding systems, including HPL, that didn’t conform to building safety standards. However, the government’s ban on combustible cladding only applies to blocks over 18m. That lets an awful lot of buildings – including the one that went up in flames in Bolton – off the hook.

Inside Housing today quotes Matt Wrack, general secretary of the Fire Brigades Union, who says “This terrible fire highlights the complete failure of the UK’s fire safety system”. We have to agree with him. Even the reforms proposed by the Hackitt Review only apply to buildings of ten storeys and above, referred to as HRRBs or high-risk residential buildings. It has to be hoped that once in place and seen to be working, these changes will be applied to all buildings, not just high rises.

So what happens now? We expect to see calls for HPL cladding to be tested and removed if it is found not to have been treated with fire retardants,  which gives it a fire safety rating of Class 0 or Euroclass B. However, it is estimated that cheaper versions graded a much lower ‘Class D’ may account for more than 80% of the market.

The continuing nightmare of residents in ACM-clad blocks are well documented. All the same issues around the rights and responsibilities of leaseholders are now likely to be extended to a new group of people. And as if that wasn’t enough, lenders have tightened up their rules since the government issued Advice note 14  last December. This leaves an increasing number of leaseholders stuck with flats that are unsellable because not only are mortgage applicants being assessed but so too are the buildings they want to live in. The Times estimates that up to 50,000 flats around the country are affected. What a mess.

So two important points for the immediate future.

  • If you manage a building with HPL cladding, talk to residents about the implications and commission a fire risk assessment if necessary. Make sure the block has an evacuation policy. If there isn’t one, make it a priority to put one in place.
  • If you own or rent a flat in a building with external cladding, contact your building manager or landlord to find out what measures they are putting in place to ensure resident safety.

So watch this space – this story is going to run and run. And one thing is crystal clear. The issues raised in the last two years around fire safety will not be resolved quickly or easily.

Mary-Anne Bowring, CEO of The Ringley Group, is speaking on this subject for the RICS in Manchester this Wednesday 20th November.


Has anything changed since 2017?

Carefully considered reform could really turn leaseholders into property owners


Back in 2017, following the last election, Christopher Howarth a senior researcher at the House of Commons set out ways in which leasehold reform could really turn leaseholders into property owners. The article resurfaced on Twitter last week. Two years down the line, we took another look at some of his points and today we’re putting our own spin on them.

First, Christopher argues for separate trust bank accounts entitling leaseholders to have the money for their sinking fund and expenses kept in a separate account for which they could see the statements. A proposal to do this was passed by Parliament in 2002 (Leasehold Reform Act 2002 Section 156) but it was never brought into force.

Ringley is one of the few managing agents that have had separate trust bank accounts since 2000 and we may be the only one that invites the client to nominate one person who can receive a copy of the physical bank statement every month.   This is a huge additional administrative burden each month and means reconciling thousands of individual client bank accounts, hence the proposal was blocked. However, this is something we would like to see brought back by any future government to reduce the risk of money moving between properties, cross-subsiding landlords or simply disappearing.

Which leads us on to transparency. In 2017 Christopher wrote: “There is no reason why a leaseholder should not see key documents relating to the management of their property. Without transparency regarding statements and contracts, the ability to go to the Tribunal is practically worthless. With complex and partial information disclosed, a leaseholder will never be able to prove a case – a fact of which landlords are well aware”.

We absolutely agree.  This is why we have more information online on the Ringley Gateway 24/7 than any other agent we know.  This includes bank balances, contractor invoices, quotes, risk documents, statements, copies of demands, arrears lists, subletting properties lists, cleaners and gardeners specifications and development plans. And we are now in the process of uploading CDM manuals too.

However, not all reform is good reform. One suggestion we don’t support is changing the Tribunal costs system. The argument goes that going to Tribunal should either be cost-neutral, or allow both sides to claim costs.

We disagree. This is a misjudged suggestion because with the rise in enfranchisement many landlords are now hard-working people who do not have the funds of local authorities or major operators.  We have been witness to some extraordinarily vexatious cases where in truth the tenant ought to have paid all the costs!

Another big issue is the complexity surrounding enfranchisement and the right to manage. It is often argued that both processes should be made a lot easier. But 25 years in property management have taught Ringley Group managing director Mary-Anne Bowring that it is a mistake to assume that management is always better in the hands of the leaseholder.  “With the heightened alerts on fire and health and safety, we find that it is the professional landlords who are managing their blocks better – where reputation and safety matter more than means-testing works.  A lower threshold could lead to misuse of what is really quite robust legislation,” she says.

Two years ago, Christopher also argued for placing the RICS code for managing agents on a statutory footingWhile managing agents are supposed to follow best practice, legislating for this would have a positive effect on the sector and their clients, he wrote. 

At Ringley we work to the spirit of the code as our guiding principle. While we agree the code may not be enforceable in its own right, it draws heavily from legislation and is the first thing that property managers are cross-questioned on at Tribunal and sometimes in the courts.  The real question is what else needs legislating for? Lord Bests’ work on the regulation of property agents should – hopefully – give us all some clarity in the near future.

Back in 2017, Christopher’s verdict was that there is a big political prize to be had for improving the rights of millions of property owners and bringing them up to equality with those who own their own house. As we blogged last Thursday, we think he’s absolutely right!




Is this the beginning of the end for ground rent?

?

A London estate agent is advertising leasehold flats in a new build block with no ground rent to pay – a first for the capital according to the sales literature.

There are a number of developers who sell their homes on 999-year leases with no ground rent and while ditching it is certainly going to be popular with residents and is bound to be a selling point for the agents involved – what is the impact on the market?  These developers tend to do one of two things on sale. They either hand the freehold over for free to the residents – who may not have the skills or financial muscle to enforce covenants or they retain them. They don’t let the residents take control by setting up a resident management company but hold the freehold forever and invest in a whole department to appoint, oversee and scrutinise the managing agents, as they see today’s buyer as someone they can re-sell to.

However, most developers do sell-on their ground rents – and its a buoyant market.  The market has adjusted investment yields since the government announced that it intends to legislate for ground rents to be reduced to zero.  It is the doubling of ground rents by some unscrupulous freeholders that has been so horrendous for leaseholders. This a scandal that, rightly, the government has moved to prevent. Reform is promised to amend the Housing Act 1988 to tackle unfair ground rent clauses but when this will be implemented is anyone’s guess.

However, there is an argument for retaining ground rent at a reasonable level. Let’s not forget that freeholders charging ground rent have a vested interest in their investment. So it is worth their while to ensure blocks are well maintained and compliant with the rules and regs that impact leasehold. If they get no benefit from owning a property, they may be tempted to cut corners.

A better approach may be to outlaw doubling clauses and limit ground rent to a percentage of the property value. That way ground rent is transparent. Homeowners know what they’re buying and they can purchase their freehold at an affordable price if they want to.

As we said in this blog last week, if freeholders have no income to gain from their leasehold properties that could lead to an abdication of care and the potential to take no interest in the condition of the buildings, health and safety or compliance issues. None of this would benefit leaseholders.

Good news for broadband providers – and you!

Removing the barriers to better broadband

Would you like better broadband speeds in your block? If so, here’s something for you. The government has announced new measures to make it easier to install faster internet connections in blocks of flats where landlords repeatedly ignore requests for access from broadband firms. Digital Secretary Nicky Morgan estimates that an extra 3,000 residential buildings a year will be connected as a result.

Under the law as it stands, to install gigabit-capable broadband in the UK’s estimated 480,000 blocks of flats or apartments, broadband providers need permission from landlords to enter the property and undertake the necessary works. One of the biggest obstacles preventing operators from installing new networks in residential blocks is the building owner’s failure  – in as many as 40% of cases – to respond to requests for access. And while broadband providers can already push for access via the courts, this takes time – and money.

So to solve the problem, the Government is now promising a cheaper and faster process for telecoms companies to get access rights. This will apply when a landlord has repeatedly failed to respond to requests for access to install a connection that a tenant within the building has asked for. And it will give operators a cheaper and more streamlined route via the existing Upper Tribunal (Lands Chamber) to connect the property. The aim is to lower the timescale for entering a property from six months to a matter of weeks and at a drastically reduced cost.

Good news all round we think.

Ringley’s 12-point plan for change

We want to see positive change in our industry – read on to find out more

In a week when all the political parties are setting out their stalls and manifestos are popping up all over the place, at Ringley we have taken the time to produce one of our own.

Yesterday, we blogged about the changes in the industry that ARLA and the NAEA want to see taken up by the new government. Today, it’s our turn. Despite moves to reform both leasehold and the rental sector, there is still a long way to go to ensure that landlords, tenants and flat owners get a fair deal. So here is how we think our industry could be changed for the better.

IF a house has to be sold leasehold, ban ground rent on it. We accept that Crown land may require leasehold sale, but there is no excuse to burden house owners with ground rent and leases of less than 999 years. 
BUT
Don’t ban ground rents on new build flats or set them at zero. If freeholders have no income to gain from their leasehold properties this could lead to an abdication of care and the potential to take no interest in the condition of the buildings, health and safety or compliance issues. None of this would benefit leaseholders.

Change the qualification criteria for freehold purchases, to ensure that all buildings can legally qualify for a freehold acquisition by the leaseholders or the Right to Manage process.

Give houses the opportunity to challenge estate charges. Like apartment leaseholders, house owners should have the right to challenge unfair charges at the FTT.
AND
Introduce Right to Manage for houses on estate developments.

Hurry up the New Homes Ombudsman scheme to ensure that owners receive transparent and fair treatment.

Regulate how client money is held. Too many letting and managing agents are not subject to RICS checks which, for example, require a three-way bank reconciliation and client balances to be proven monthly.

We would also like to see a whole tranche of new legislation to right the wrongs that, we as property managers, have to deal with every day:

  • make reserve funds mandatory to overcome the problems suffered by thousands of blocks with inadequate leases. Scotland does it, so why can’t we?
  • make it easy for leasehold blocks to make environmental improvements. Currently, most cannot, simply because the leases as drafted do not allow improvements (see our blog on solar panels here)
  • make RTM costs recoverable as service charge expenditure. That they are not, simply because these costs were never drafted into leases and are therefore the fact that they remain recoverable only from RTM members, is just unfair.
  • make the right to manage transferable – a share in the freehold is transferable – why can’t an RTM be transferable too?  The never-ending process of trying to recruit new RTM members is draining.
  • legislate so that blocks that have not had major works for sometimes 50 years+ are then not frustrated from collecting the money desperately needed by the Garside case requiring them to collect slowly.  Either the owners have benefitted from buying flats cheaply (because the block was run down) or they will have saved spending any money for years.

And finally…Grenfell has been in the news this week as the inquiry has started to report its findings. In the wake of the fire and the questions it has raised about the safety of our blocks, leaseholders should not be paying for the removal of flammable cladding. They were not responsible for choosing the construction materials for their block and bought their properties in good faith.  The government could have banned these dangerous materials when Europe and the USA did – if you allow it to be sold, you should fix your mess!

There are an estimated 4 million people in the UK living in leasehold properties and, according to the English Housing Survey, 4.7 million more rent their homes from private landlords, plus all the many block managers, property agents and suppliers that keep the sector running smoothly. That’s a lot of people whose lives are affected by government policy on property on a daily basis. And a lot of votes.

Our message to politicians is that they should give that fact due consideration when they are campaigning in constituencies around the country over the next few weeks.

Manchester tops latest BTR ratings

Manchester is the best place in the country to rent a new build flat says Homeviews

A BTR development in Manchester has topped the polls in a new report that rounds up residents’ reviews of their rental homes. More than 100,000 people around the country now live in a Build to Rent (BTR) apartment building. Initially, the sector was focused on London but now the regions are picking up speed both in terms of completed developments and projects in the pipeline.

HomeViews publishes resident reviews that give the developments they live in a star rating out of five across a range of categories. These include facilities, design, location, value and management. Homeviews has just published its latest report, rounding up more than 5,000 reviews from tenants living in 84 BTR and 438 build-to-sell developments across eight UK cities. The message for BTR developers and operators is a positive one: new build developments are delivering for tenants with more than two-thirds of BTR developments getting ratings of more than 4 out of 5. So what does BTR have to offer that is resulting in such great reviews?

Residents talk positively about communication, reliability, personalised service, kindness and – parties! Being pet-friendly, having a concierge and gardens, as well as gyms and parking got top marks from tenants. It’s also clear that customer service and good building management really matter. Management isn’t perfect, with 10 of the 84 developments receiving a management rating of 3 or below. However, 26 developments are delivering an incredible building management service and have been rated 4.5 and above. These include schemes managed by Allsop, Essential Living, Fizzy Living, Way of Life, Greystar, be:here and Legal & General.

BTR management is being handled in different ways – from apps, third party suppliers and building managers all called ‘Bob’ – presumably to make them easy to remember! What is clear is how passionate residents can be about the management team on site. The people BTR operators employ appear to be their greatest investment and it is paying off.

The Trilogy in Manchester tops the list for the highest-rated BTR development in the UK and the city boasts three of the top ten rated schemes. The Cargo Building in Liverpool came in second, followed by Dressage Court, Sailmakers and Vantage Point in London. Schemes in Birmingham and Newcastle also made the top ten. When comparing the average ratings and scores from BTR tenants living in the regions to London, the regions scored higher on every rating.

The US rental market is already familiar with the power of reviews with 70% of renters deciding to visit a property with a higher reputation score and 73% saying reviews affected their decision to rent.

The UK BTR sector is growing at a faster rate than anyone predicted. Earlier this year Savills reported that by the end of Q1 2019, there were more than 140,000 BTR homes complete, under construction or in planning. This marks a 22% increase from 2018 and is a figure 13% higher than identified at the end of Q1 last year.

To find out more and to download the Homeviews report click here

Fire! Should you stay put or evacuate?

Is there an evacuation plan for your block? If you don’t know – find out.

Would you stay put if a fire broke out in your block? As the first phase report of the Grenfell Tower Inquiry is published, the “flawed” stay put policy used on the night of the devastating fire is now under intense scrutiny.

‘Stay put’ is the standard advice given to residents in blocks of flats who are not directly affected when a fire breaks out. They are told to stay in their homes with the windows and doors shut. The expectation is that the construction of the building and fire doors leading onto communal areas will protect people from the spread of fire long enough for the fire service to attend if necessary and put out the fire. At Grenfell Tower, this policy proved utterly inadequate. It is now judged to have led to unnecessary loss of life. As a result, the government is working on a “full and detailed examination” of the stay put/evacuation strategy for fire in high-rise blocks.

Housing Secretary Robert Jenrick told the Housing, Communities and Local Government Select Committee yesterday that, while expert consensus is that stay put is “valid” for most tall blocks, the government is now reviewing the advice.

As a layperson it is hard to understand the thinking behind stay put: surely it makes more sense to get out of the building as quickly as possible? So here’s the explanation. The thinking behind it is twofold:

  • First, the fire service needs unfettered access to hallways and stairs to get up and down to evacuate the building in priority order. This would be hampered by everyone trying to evacuate at the same time – particularly in buildings with only one stairway.
  • Second, opening and closing doors increases air circulation which not only accelerates combustion and the spread of smoke but panicking residents rarely stop to close their door behind them. This leaves other parts of the building exposed to the fire.

A stay put policy is intended to protect residents (who can be safely rescued some other way) from smoke inhalation, as smoke kills long before the heat from a fire.  But the Grenfell Inquiry judge is now calling for evacuation plans to be developed for all high-rise buildings. Ringley Group managing director Maryanne Bowring agrees. She does not believe stay put is the right policy for all high-rise blocks.

Her view is this. “If there is no misting system or sprinklers in your building and you are above the height of a ladder (normally assumed to be six storeys) or if the fire is below your home in a tower, or if the facade of a building is burning, or if the building was not constructed in the last 10 or so years, I would say you must get out.

She adds: “You can have as many fire risk assessments as you like, you can have as much fire detection equipment as you like, but there should now be an acceptance that any fire policy is made up of component parts, one of which can fail, even if serviced or checked yesterday – so visual and common sense judgements must be made”.

We all feel for those in the fire and call centres that night who were under orders to keep telling residents to stay put, when they could watch the fire at Grenfell Tower on mobile phones or in person and see that the building was engulfed by flames.

Dame Judith Hackitt, who carried out a review of fire safety and building regulations for the government post-Grenfell, will now advise ministers on the format of a new building safety regulator. The aim is for a fundamental shift in the design, construction and management of tall buildings with the focus firmly on safety. This is badly needed for the long-term wellbeing of residents and we await the outcome with interest.

Solar panels on flats – what you need to know

Could solar panels work for you?

Following on from last week’s tips for greener homes, today we’re taking a closer look at fitting solar panels on blocks of flats.

At first glance, there are plenty of plus points. You get cheap electricity; you can sell any energy you don’t need back to the grid and of course, there’s that nice warm feeling you get when you know you’re doing your bit. In some cases, government subsidies may even be available to help with the set-up costs. But as we pointed out in our earlier blog, installation may not be straightforward. Here’s why.

If you manage a block that is interested in installing solar panels, there are some issues to be thought through first. Obviously, the roof needs to be suitable. Which way does it face? Is it large enough to house the panels? And of course, you will need planning permission.

Then there are the all-important legal aspects to think about. As ever with flats, the starting point is the lease. Who is legally responsible for the roof and who pays for the installation? The view from property lawyers is that solar panels are likely to be considered “improvements” rather than “repairs” under the lease. While repairs can normally be recovered via the service charge, there is no guarantee that improvements will be treated in the same way. So unless the lease includes specific wording to this effect, the service charge can’t pick up the bill.

Lee Hurle from Ringley Law says that if this turns out to be the case, the cost will have to be funded outside of the service charge mechanism. Flat owners will have to volunteer to pay their share as they are not legally obliged to pay it and not everyone may agree to do this. So blocks would probably have to structure the cost as a loan to the company.

 Other issues that will need some thought are:

  • Panel maintenance – again, who is responsible and who pays?
  • Panel infrastructure – does the lease allow for running cables through the block/s?

At last, you’ve overcome all these hurdles. The panels are fitted and they are producing surplus electricity and a financial return for the block. But what happens to the money? Don’t automatically assume that this can simply be put into the reserve fund – if one exists. The lease may or may not allow for a reserve fund and even if it does, it may not be possible to use it for the proceeds of the solar installation. Back to Lee. He thinks the block may have to hold any funds received on behalf of the company as company funds instead.

So if you live in a flat, opting for solar may not be plain sailing although the potential benefits mean it is worth consideration. Why not raise the idea with your fellow residents? But before you go ahead and choose a supplier, remember that solar companies are unlikely to have a detailed knowledge of any lease restrictions that could apply to your block. So if you need help getting to grips with your lease, talk to our legal experts at RingleyLaw. They have years of experience and will be able to offer you the advice you need.