Brexit sees off ‘Autumn bounce’ in house prices

Sales are down but could you grab a bargain?

Autumn. Now is the time when estate agents expect to see a bounce in market activity and prices. Children are back at school and buyers and sellers come into the market ahead of Christmas. But not this year. According to the latest Housing Price Index from Rightmove, the number of sales agreed is down in all regions compared to a year ago, with a reported 5.5% drop showing a marked reversal from the +6.1% sales-agreed flurry that the market was seeing a month ago.

The number of properties coming to market is also down by 7.8% this month compared to the same period a year ago, again with all regions down on this time last year. And we are now seeing a 0.2% fall in prices for the first time since 2010, so what’s going on?

Rightmove’s housing market analyst Miles Shipside thinks Brexit is largely to blame. “Many have got used to living in the jaws of uncertainty since the referendum over three years ago, and have been getting on with their lives and housing moves. However, as we approach yet another Brexit deadline, there are signs that the increasing gnashing of teeth is causing some to hesitate,” he says. This year, any pick-up in the market is a late starter at best and if uncertainty persists, Miles reckons the activity we normally associate with the autumn could be delayed until the New Year.

Lack of consumer confidence is also driving up the recent increase in the number of residential property sales that are now falling through before completion. Sales progression specialist mio, told the press this week that the problem is likely to continue short term due to political and economic uncertainty. And figures from Quick Move Now back this up, revealing that almost a third of all failed transactions were a result of a chain collapsing.

The good news though, is that there may be a silver lining for anyone planning to buy or trade up. If potential buyers can hold their nerve they could find themselves in a strong negotiating position. They may even be able to grab a bargain – something that has become all-too-rare in most parts of the country in recent years. Are we seeing the start of a readjustment in house prices? Only time – and the outcome of Brexit will tell.

Sprinklers: could new proposals be a life saver?

Could one of these save your life?

Earlier this summer, the London Tenants Federation (LTF) urged the government to put an end to the ‘stay put’ policy used when there is a fire in a high-rise block. Following a recent spate of fires, the London Fire Brigade seems to agree and has apparently ditched stay put in favour of immediate evacuation. According to a report in Building this week, residents in Worcester Park, where a fire destroyed a six-storey block a few weeks ago, have now been advised by the LFB to leave their homes immediately if another fire breaks out.

The LTF is also calling for sprinklers and communal fire alarms to be fitted in all new and existing blocks and it seems the government is listening. A call for evidence published at the end of last year looked at Approved Document B of the Building Regulations, which includes rules on sprinklers in high rise blocks.

The government is now considering introducing sprinkler systems in more blocks. At the moment developers have to fit sprinklers in buildings more than 30 metres high. This is around 10 storeys – approximately the height that can be reached by a fire engine’s ladder. Anything above that and firefighters have to rely on dry risers to connect hoses and push water up to the higher floors. As witnessed at Grenfell Tower, this doesn’t always work effectively. The thinking now is that the height for fitting sprinklers should be lowered and a new consultation (click here to take part) asks whether the trigger height for sprinkler installation in new build blocks should be reduced to 6-storeys and above.

This sounds like a step in the right direction but the consultation only tackles new build. So what about existing blocks? Back in March, London Fire Brigade Commissioner Danny Cotton said: “As well as covering new builds, we want the Government to look urgently at new regulations to require sprinklers to be retrofitted in older residential blocks and any building housing vulnerable people”.

This poses a number of questions around accidental activation, vandalism and misuse as well as the sheer difficulty of retro-fitting systems into older buildings. But as ever, the biggest issue is cost – and more to the point, who pays: landlords or residents?

Fire and life safety expert Bradley Parker from Future Fire Systems tells us that early warning fire alarms can be installed more easily and cheaply than sprinkler systems. “Alarms can be set to sound at very early smoke stage, warning residents who can either tackle the fire (if it’s small) or escape,” he explains. “However, sprinkler systems will only activate when the room exceeds a particular temperature, by which time the fire will have already taken hold and could lead to loss of life due to smoke/fume inhalation if the occupants are sleeping.”  Bradley thinks the best case scenario would be a combined fire alarm and sprinkler system to act as an early warning system and an extinguishant.

This debate that will now rumble on until the government decides on next steps but at least the issue is now being widely discussed.  

In the meantime, if you live in an older block, make sure the issue of fire safety is raised at residents meetings. Talk to your block manager to make sure your flat front doors and fire doors are fit for purpose and regularly checked and maintained. And encourage your neighbours not to store bikes, prams or other bulky items in landings, stairwells or corridors. Best advice now appears to be ‘evacuate’ rather than ‘staying put’ so be safety- aware and make sure your escape routes are kept clear.

New legislation: two to watch

There are two bills now going through Parliament, that propose sweeping changes to freehold estate charges.  First, MP Helen Goodman awaits a second reading of her Freehold Properties (Management Charges and Shared Facilities) Bill which was proposed in November 2018.  This Bill makes express provision for a cap on charges and also seeks to empower freehold homeowners to be able to self-manage should they wish to do so.  This would improve on the government’s stated ambition of granting ‘fleecehold’ sites the right to a court-appointed manager.

Second, on 5 June, Parliament heard a private members bill (tabled by Preet Kaur Gill MP) which seeks to legislate that service or estate charges  for freehold owners on  housing estates will be subject to some of the same accountability that leasehold apartment owners benefit from.

The Freehold Properties (Management Charges) Bill, if passed, would oblige landlords to provide accounts of management charges payable under Section 19 of the Leasehold Reform Act 1967 to freehold property owners.

At Ringley, we treat freehold house owners no differently from leasehold apartment owners. Sadly for many, this is not the norm.  We often hear stories of residents who own their own homes as freeholders but are left feeling helpless as they try to find out what monies are in the scheme.  Residents who are rightly aggrieved that, despite paying into the said fund, they are powerless to try and enforce the responsibilities of the landlord or manager.  

Ms Gill correctly asserts that the existing law requires urgent reform and that Section 19 expects more from the consumer homeowner, who pays the fees, than the landlord or scheme manager who is expected to provide a service. 

Government to boost access to EV charging points – but ignores leaseholders

Poor air quality and the spectre of climate change are driving a push towards electric vehicles. The Government recently doubled funding for on-street EV charging and is proposing changes to the Building Regulations to make it easier to provide them. The aim is to give every new residential building with a parking space, an EV charging point. The changes would also apply to buildings undergoing a material change of use to create a dwelling.

So far, so good. But if you read the Department of Transport consultation paper, you might spot a gap: it makes no mention of existing residential property and doesn’t talk about blocks of flats. Most flat owners won’t benefit from extra on-street charging, especially in areas where parking is at a premium – which is virtually all our major towns and cities.

The consultation does propose that all residential buildings undergoing major renovation with more than 10 car parking spaces should have cables for electric charge points routed to every space. But if you live in an older block, no solutions are offered to the many questions raised by leasehold property. Problems such as how to get around restrictions on development or modifications spelled out in lease covenants, who pays for new charging points and how should costs be allocated among residents, are completely ignored. They appear to have been put on the “too difficult” pile.

Jamie Willsdon, director of EV charging solutions provider Future Fuel, has raised these issues with the Department of Transport. He hopes the residential block sector will take up the cause for leaseholders and help put pressure on the government. “I was hoping the latest publication from the Department of Transport may have some positive content that covered existing multi-dwelling residential blocks. Sadly… it doesn’t. This is a huge sector and something installers/designers working in the residential block market will need assistance with. I’ll be working hard to engage leading players in the block sector to lobby government on this issue on behalf of flat owners,” he says.

This is a problem that won’t go away. We support Jamie’s call to the DoT not to ignore the needs of the millions of flat owners around the country, who should be able to access EV charging points as easily as someone living in a house. For landlords, adding charging points could also add value and (literally) improve the kerb appeal of their blocks – and for residents it would make the prospect of buying a hybrid or electric vehicle far more appealing.

We will be making our voice heard on this and we urge you to contribute to the debate. You can download the consultation here. Don’t forget to respond by 7 October.

How NOT to win friends – or votes!

If you want a lesson in shooting yourself in the foot, you don’t have to go any further than yesterday’s ‘right to buy’ announcement from the Labour party. Labour has pledged to introduce a new policy: if it wins the next general election it would give private tenants the right to buy the homes they live in.

Shadow Chancellor John McDonnell framed the proposal as a response to the problem of “overcrowding” and landlords “who don’t maintain their properties”. This is a hammer to crack a nut. And it has produced the expected response from landlords and their member organisations. This is a badly considered plan and its timing is terrible. As we all hold our breath to see whether or not we will be facing another General Election in a few weeks’ time,  Labour just lost the votes of landlords around the country.

Most landlords provide well-maintained homes for their tenants – and are right to expect a decent return for their investment. They are not providing social housing. Bad landlords are not the norm and as David Smith from ARLA says: “If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance”.

It is also doubtful, if the aim is to allow tenants to buy their rented home for below market value, whether or not lenders would be willing to provide mortgages on that basis. The housing market is predicated on market value, not on arbitrary sums set by the government.

Smith believes Labour’s plans are effectively a kind of compulsory purchase that is entirely unacceptable and ultimately unworkable, reducing the availability of homes to rent and destroying the viability of the PRS. Spot on, we say.

Giving council tenants the right to buy in the 1980s ultimately produced a crisis in social housing, which successive governments have failed to address. The problem has spilled over into the private rental sector which now has to find homes for tenants who would, in the past, have been housed by their local authority. A well-regulated, strong PRS is an asset and responsible buy-to-let landlords are badly needed in a country with too few affordable homes to buy.

“Time to emigrate,” says Ringley & PlanetRent Group CEO Mary-Anne Bowring.  “Personally, I am fed up with out-of-touch politicians stereotyping private landlords.  There are some rogue landlords out there but they are the minority – by and large, private landlords are hard-working individuals trying to build a nest egg for their children or their retirement.  The Tories have squeezed landlords with mortgage tax changes, reduced their income by banning up-front fees and even expect them to clean up after tenants at the end of the tenancy!  Now Labour want to dispossess them of their property altogether – I do wonder seriously, who is fit to run the country?” 

In our opinion, the Labour party should turn its attention to finding ways to deliver a major housebuilding programme that would provide jobs, as well as homes for people. Attacking landlords and their ability to provide those much-needed homes is an own-goal of momentous proportions.

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.