More red tape for besieged agents

New money laundering legislation comes into force today. Regardless of Brexit, property agents must abide by the Fifth EU Money Laundering Directive, ensuring they risk-assess their business processes and carry out thorough ID checks on customers.

Agents will need to carefully consider how they might find themselves exposed to money laundering and to the risk of financing terrorism and ensure they have measures in place to manage and eliminate any risks.

Letting Agent Today explains that agents must carry out customer due diligence on landlords and tenants where renting is “for a period of a month or more, and at a rent which during at least part of that period is, or is equivalent to, a monthly rent of 10,000 euros or more”.

 If a third party is acting on behalf of another person in a particular transaction, that person is described in the legislation as the ‘beneficial owner’, ie the person on whose behalf a transaction is carried out. Beneficial owners must in future be identified and any potential risks they pose be assessed. It will also be important to assess the risk of money laundering that could result from:

  • Sending money to customers to or through high-risk third countries which don’t have effective systems in place to prevent money laundering or terrorist financing;
  • Company services or transactions;
  • The financing methods used to support the business; and
  • Other transaction-based activities such as non-face-to-face services.

All customers and beneficial owners are now subject to identity checks via an official identification document such as a passport or driving licence. Photo ID, as well as verification of the current address, will be needed for both new customers and existing clients if their circumstances change.  Due diligence also applies should agents have any doubts about the authenticity of an existing customer’s ID information or suspect that money laundering or financing terrorism may be taking place.

Under the new rules, risk assessments must be recorded, kept on file and regularly reviewed. Any changes to a business, it’s financing or the environment in which it operates will trigger an updated assessment, which must be made available to HMRC on request.

Of course the property sector should not provide an easy route for money laundering. But at a time when the industry is steeling itself for yet more reforms, this new legislation is yet another hoop for agents to jump through. And this is being piled on top of the 125-plus other rules and regulations that agents are faced with on a daily basis. That said, it is hard to argue against legislation that should go some way at least to safeguarding the sector from criminal activity.

Don’t forget to test your smoke alarm!

This could save your life – so make sure it’s working properly

In the same week that the fire service reported that a worrying number of smoke alarms in rental properties don’t work, the Royal Institute of British Architects (RIBA) has told the government that sprinklers shouldn’t be seen as the answer to all fire safety problems in blocks of flats.

The architects’ body supports the use of sprinklers in high-rise flats, describing them as a “highly effective means of life protection”. But they also point out that installing sprinklers “should not be used as a means to compensate for other essential life safety measures or to justify reducing minimum standards.”

As well as sprinklers, RIBA say centrally addressable fire alarm systems should be required in new and converted multiple occupancy residential buildings.

We wholeheartedly agree with Jane Duncan, chair of the RIBA Expert Advisory Group for Fire Safety, when she says “It is over two years since the Grenfell Tower tragedy, yet far too little has changed”.

The English fire regulations are not fit for purpose, she says. It’s not right that we should lag behind both Scotland (where sprinklers will soon be required in all multiple occupancy residential buildings) and Wales, where sprinklers have been required in all new and converted residential buildings since 2013.  

So we join RIBA in calling on the next government to maintain a strong focus on fire safety and give absolute priority to the radical overhaul of the building regulations that is so badly needed.

To that we would add a plea to all landlords, property managers and residents to check their smoke and fire alarms regularly. This is as important for BTL landlords and their tenants as it is for leaseholders.

And it’s especially important at this time of year when we are all plugging in our Christmas lights and using more candles and open fires. So if you have battery-operated alarms, check and change the batteries regularly. No matter how annoying it is when they go off by mistake when you’re making toast, don’t ever be tempted to remove the batteries – that alarm could save your life.

Emergency evacuation – we can help

If you need help leaving your home in an emergency, let us know.

Last week, the BBC carried a story about the problems faced by disabled residents living in flats if they need to evacuate their homes in a fire.  One council tenant commented that she had received no communication from her local authority explaining what their evacuation policy is, so she decided to take matters into her own hands.

This lady has sensibly spoken to her neighbours and asked a group of them to help carry her out of the building if they need to escape the building in an emergency. The BBC investigated around 700 London blocks, speaking to residents about the arrangements for their buildings. They didn’t find a single evacuation lift.

At Ringley, since the Grenfell Tower fire, we have been following the work being done by the government on building safety and closely monitoring the leading industry analysis. We recently took part in RICS CPD events on the changes that are coming through as a result of the 2017 tragedy.

The challenge for the property sector is that rarely are regulations retrospective; as the BBC pointed out, there are few buildings with special fire evacuation lifts.  The advice is always that standard lifts should not be used for evacuation in case of fire because, unless suitably adapted and protected, lift shafts act as a funnel, enabling smoke to spread through the building. Generally, electrics automatically shut down during a fire and fire fighting lifts run off of emergency generators, not from mains electricity.

There is now work going on in this area to identify whether adaptations to buildings could be made to incorporate purpose-built evacuation lifts, so the regulations around lift use may change in future. In 2018 the government instructed a review of the approved building regulations document relating to fire and we await the outcome with interest.

In the meantime, what we do at Ringley to look after our disabled residents as best we can, is to write to owners and residents asking them to let us know if they or their neighbours need ‘special assistance’ in case of an emergency evacuation. We database this information so that should such an emergency arise we can liaise with the fire department to enable them to help those that need it most.

So if you or one of your neighbours is worried about how they would escape the building in the worst case scenario, please call or email us to let us know. Our most important job is to keep residents safe.

How a ‘golden thread’ of data will help keep residents safe

Sam Hay (left) and Mary-Anne Bowring (right) spoke to RICS members about the future of building safety in Manchester on Wednesday

At an RICS event in Manchester yesterday Ringley CEO Mary-Anne Bowring and LifebyRingley MD Sam Hay spoke about the impact on block management of Dame Judith Hackitt’s building safety review. For now, this only applies to high-risk residential buildings (HRRBs) – which are defined as those with 10 or more storeys.

One big idea is the proposal to create a ‘golden thread’ of key information about every new HRRB in the country. This data is to be digitally recorded, maintained and made readily available to all stakeholders, including residents.

The kind of information that will be recorded is

  • Size and height of the building
  • Structure
  • Building fabric
  • Escape and fire compartmentation information
  • Systems in operation
  • Permanent fixtures and fittings

This will not only apply to new buildings, so you can imagine the difficulty in retrospectively piecing this together for existing stock. There are estimated to be between 2,000 and 3,000 such buildings in the UK.

Block managers are only too well aware that a lack of complete, accurate and properly maintained building information is common and throws up a number of challenges. The building owner doesn’t have to keep the information that is required to be able to easily and effectively manage building safety throughout the building life cycle so it is often virtually impossible to work out whether any changes have been made between the original design and completion. This may have an impact on the building safety strategy as modifications and refurbishments are made over the years.

The worry here is that what gets lost is the fire scheme, as originally conceived. Also when carrying out a major works project or fully refurbishing a building, it is difficult for both block managers and their contractors to work out what impact any changes might have on safety in that building.

This information gap has become all too clear during the inquiry into the Grenfell fire, where a recent refurbishment contributed to the tragic loss of life. In future, with everyone involved in the operation and maintenance of the building as well as the fire service having access to this ‘golden thread’, building design will be made completely transparent. Any changes that could impact safety can then be managed through a formal review process – another of Dame Judith’s recommendations which Mary-Anne and Sam also discussed with their audience.

 Of course, as we point out above, these proposed changes only apply to HRRBs, ie those blocks that are above 18m high. But anything designed to keep flat owners and renters safer in their beds is to be applauded. At least it’s a start.

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.

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

How to create more space in your home

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Make the most of your space – it’s cheaper than moving!

Do you ever wish you could push the walls of your home back and give yourself more room to spread out. Sadly that’s not possible, but before you start working out whether you can afford a bigger place, online agent Residential People has some tips to help you make the most of the space you’ve got.

Here are some simple steps you can take to make your property more space-efficient.

Could you make your kitchen open plan? Blocking off the kitchen from other rooms can make your home feel a lot less roomy. Opting for an open plan living and dining experience creates a friendlier atmosphere and makes the space feel larger and more functional.  This is likely to be a no-no for renters (unless you have a very acommodating landlord!) and leaseholders will need to read their lease and take professional advice before talking to a builder. However, if your lease allows internal alterations and your kitchen isn’t separated by a supporting wall, it may be easier – and less costly – than you think to open up your home.

Does your home have a staircase? If so, the space underneath it is a potential goldmine. You could convert the space into a set of drawers or cupboards, make yourself a pantry, or even create a cosy little reading nook or home office, perfect for a seat and desk or a place to store your books. Again, check with your landlord and/or your lease and your property manager before making any structural alterations.

If you are able to redecorate your home, go for light colours. Dark, bold colours only serve to make a room feel more enclosed and less open and airy. Using light colours, such as pale pastels, white or grey, can open up a room and allow more light reflection, making it feel much bigger than it is. 

Try to optimise wall storage. Most of us have storage needs that tend to use up a large proportion of that valuable square footage. So instead of using your floor space, consider making use of more shelves and wall-mounted cupboards.  Think about utilising the space above doors and windows too.

Tiny homes are becoming more popular around the world as a solution to homelessness and to combat ever-increasing property prices. And even if the idea of living in a really small space doesn’t appeal to you, there are lots of space-saving ideas out there to help you make the most of the room you have. Use your small space well and you will be joining a growing movement of people trying to reduce the environmental impact – and the cost – of their home.

And if you need advice on what is and isn’t allowable under the terms of your lease or rental agreement, talk to us at Ringley. Our property specialists are here to help.

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.

Focus on property management – but make sure you get it right!

Letting agents have been told today, that by focusing on lettings only and not offering property management, they could be losing out on “thousands of pounds of potential income”. New research from outsourcing supplier ARPM, reported in Letting Agent Today, shows that many agents typically offer let-only. By offering a full management service too, ARPM calculates they could boost average annual income by up to 80% per tenancy. That’s big money.

The report reveals an untapped market of almost one million landlords in London alone who only use letting agents to find them tenants – or don’t use one at all. With private rentals expanding across the country year-on-year and many landlords living remotely from their investment property, there is huge potential for growth. And a chance to claw back the estimated £400 per letting that agents are expected to lose as a result of the tenant fees ban.

Property management is not a business to be entered into lightly

But – and this is a big but – property management is a serious business. The government has agents in its sights right now and poor service in our sector is soon to be outlawed by the advent of stronger regulation and the need for recognised qualifications. So, like marriage, this isn’t a client relationship to be entered into lightly.

As chartered surveyors and professional managing agents, we have specialised in this service for many years. Our lettings division Life by Ringley, based in Manchester and servicing clients across the region, has a clear understanding of the differing needs of landlords and tenants. We provide both basic and full management services, with fees clearly stated from the start. Click here to find out more. https://lifebyringley.co.uk/

As well as managing rental property, Ringley specialises in leasehold blocks. Rather than a one-size-fits-all approach, our Blockcare offer has something for everyone from a basic service to fully managed options. Fees are charged according to the level of management you require. Sign-up is easy and almost everything from site reports, minutes, invoicing and accounts can be done online. We can take us much or as little of the hassle out of your management requirements as you want us to.

We even have a tailor-made package for you to use if you can’t afford a managing agent! Click here to find a package that suits your needs https://www.ringley.co.uk/property_management