Get on your bike! This was the message from Prime Minister Boris Johnson yesterday as he launched ambitious plans to get us all off the sofa and out walking and cycling. As part of an initiative to help us all lose that lockdown flab, the PM announced that the Government will be rolling out thousands of miles of new protected bike lanes, cycle training for everyone, and even bikes available on prescription.
The new plan aims to build on the huge number of people who took up cycling during the pandemic. Everyone has been unearthing their old bike from the back of the shed. Buying a new cycle has been an impossible ambition as specialist suppliers like Halfords completely sold out all their stock and even decent second-hand bikes, usually readily available, have been like gold dust. The Government’s plans are clearly popular as the website set up to distribute £50 vouchers so that people could get broken bikes fixed, crashed within minutes of its launch.
But even if you can get your old bike back in working order, if you live in a flat, where are you supposed to keep it? Short of hanging it on the wall or from the ceiling of your flat – which could breach the terms of your tenancy agreement if you rent your home – many people have few options.
Modern developments often now include bike storage but are older blocks ready for a deluge of bike ownership? Anyone who has lived in a residential block has suffered a neighbour who insists on keeping their bike in the hallway outside their door. One of our property managers has even reported seeing a resident taking a motorbike up in the lift!
But bikes in common areas are a potential trip hazard and could block an exit route if a fire breaks out, so proper storage will be needed. Could developers build and demise secure bike stores for performance bikes with fully protected hinges and locks -and does a secure bike store need planning permission? These questions will need quick answers if we are all to buy-in to cycling.
Another big issue is the number of flat owners who don’t have the contents insurance that is necessary to cover a bike. Bike theft increased during lockdown but recent figures suggest that up to two-thirds of people living in flats don’t have their own insurance. Don’t just assume that your buildings insurance will cover theft. It won’t.
So don’t get caught out. Talk to your landlord or property manager about storage options. And make sure you cover your bike – if you can get hold of one – with the right insurance.
E-signing could be about to transform homebuying. E-signing of documents has come into its own during the pandemic but there still have been some situations where an electronic signature is not acceptable. However, as the old saying goes necessity is the mother of invention. So today HM Land Registry has announced it is now able to accept electronic signatures for a number of important property transactions.
In another move aimed at boosting
the housing market transfers of ownership of property, leases, mortgages and
other property dealings can now be signed electronically. The hope is that this
will make it simpler and quicker for people to move home.
From today HM Land Registry will
accept ‘witnessed electronic signatures’ in place of wet-ink. These make it
possible to sign legal documents remotely, although a witness who is present at
the time must counter-sign the documents electronically too.
This signals the removal of the
last strict requirement to print and sign a paper document in a home buying or
other property transaction. This will help homebuyers during the current health
emergency while lots of people are working at home, but the Land Registry also sees
it as “a keystone of a truly digital, secure and more efficient conveyancing
process that we believe is well within reach”. Good news, we think. Especially
as the next step is to also look at the possibility of using qualified
electronic signatures – which won’t require a witness. Instead, this type of
E-signature relies on using a ‘Qualified Trust Service
Provider’ which will have standards in place to securely verify the identity of
the signatory and the Land
Registry is already exploring their introduction as soon as it becomes practical
to do so.
At Ringley we’ve been using
E-signing for a wide range of documents for some time. This technology has
certainly made life easier for both our staff and our customers during the last
few months, so we welcome today’s announcement. It should bring conveyancing firmly
into the 21st century. We are also pleased to hear that work is also
going on to improve security around E-signing.
The Government is exploring whether the digital identity checking
technology used in other sectors could also be used in the conveyancing
industry to increase resilience against fraud and improve the ease of buying
and selling. If they get this right, we think this is good news all round for
homebuyers, vendors and their property and legal advisers. What do you think?
DAre you happy to shoulder the responsibility for building safety in your block? If not, you’re not alone. According to new research published this week and commissioned by freeholders the Savanta Group, around 75% of more than 1,000 leaseholders they surveyed are concerned about the new obligations they could be landed with as a result of the Government’s building safety reforms.
The research reveals that most leaseholders are satisfied with their current level of rights and responsibilities. But they are concerned that the new building safety obligations outlined in the draft building safety bill last week, would be a “disaster” if left to residents. And one in three even went so far as to say that if they are faced with additional responsibilities for building safety, they would be more likely to sell their property than before.
The proposed reforms, if translated into law, could radically increase the financial, legal and even criminal obligations associated with building management and include the creation of an “Accountable Person”, in charge of building safety. Residents could find themselves forced to take on this position, which involves considerable liability, should freeholders exit the market as a result of the proposed abolition of ground rent. Is this simply not too much for residents who may be expert in their own right but not in property? And even the very best property manager is not an engineer or facilities manager either! So essentially all this means extra fees for leaseholders. And with the new government push towards commonhold, without the role of professional landlord, then what will prevail?
As well as the draft safety bill, last week saw the publication of the Law Commission’s report into leasehold reform, which promotes commonhold as the preferred alternative to leasehold and which would bring in a new model of shared ownership and responsibility in residential blocks.
Although 1,000 leaseholders out of the estimated 4.5 million flat owners in England is a small sample, what this latest research from Savanta tells us is that very few residents have any real interest in shouldering the burden of managing their block. They are rightly concerned that they would end up being responsible for “keeping on top of fire and safety management” which, as any property manager will tell you, is a job for a professional. In fact, our view, along with that of the Institute of Residential Property Management is that, under the new building safety regime, the role of ‘Accountable Person’ is not a role fora property manager, who in any case would struggle to get enough professional indemnity insurance to allow them to carry it out. In truth, it is the fire safety profession that is growing – and even then property managers will have yet more to coordinate and manage.
In fact, although freeholders are largely out of favour in the current climate, they are far better placed to take on the responsibilities set out in draft bill. There are plenty of good, responsible freeholders in the property market who are well equipped – and funded – to take on problems such as building disrepair and conflict between residents. They are also able to take whole-building decisions that would be impossible for leaseholders to tackle.
All a leaseholder asks is to live in a well-maintained building that has been constructed in accordance with the building regulations, which is managed properly and retains its value. They should not be expected to shoulder the responsibility of keeping their building and their neighbours safe too. Now, it seems inevitable that they will have to shoulder the cost!
Can we expect to see a town centre revival in the next few years? The Government certainly hopes so. Changes to planning legislation, expected to be in place by September, will make it quicker and easier to demolish and rebuild unused buildings as homes, and to re-purpose commercial and retail properties to help revitalise high streets and town centres around the country. Other changes will also enable up to two additional storeys to be added to homes via a fast track approval process.
The aim is to bring people back into urban centres and make more space for new businesses, helping towns and cities adapt quickly to what consumers and business need, while at the same time reducing pressure to build on greenfield sites and deliver more homes that fit the character of their local area – but without the red tape. And if our national green strategy is to encourage people to use their cars less we need to live where our jobs are – another great argument in favour of living and working in our town centres.
The problem right now is that many of our town centres are rather depressing places to live in. Institutional Build to Rent with flexible workspaces and amenities are coming – but not fast enough.
In reality, creating homes from commercial space can create problems for developers. It is clear that our largely Victorian and pre-war high streets do not meet today’s requirements; parking provision is poor and expensive, units are often small with a lack of ceiling height or opportunities for mezzanine floors; basements are built on a grid system with a high number of structural partitions, and we have space to light and air-exchange requirements to meet. So retail buildings clearly present challenges. But conversely, frequently unused upper floors bring the prospect of creating on-trend loft-style units. And while we have ‘overlooking’ rules, with the appropriate screening this too could be a chance to open up atriums and create internal gardens.
a little creative thinking, there are real opportunities for developer- led
town centre initiatives. First, one can achieve much higher densities in
town centres, second, localism is unlikely to present any threats and third,
making urban areas car-free is less likely to face opposition.
We all saw the banks raise capital by auctioning off their freeholds and becoming tenants, with opportunities still remaining on our beleaguered high streets for more of the same. Large stores could very easily downsize, lose some floors to residential, and with this autumn’s new legislation in place, have new penthouse floors on the roof. Management company structures need not disturb the developer’s right to retail rental income, as the developer can grant his investment vehicle a head lease thereby making the retail unit a member of the management company, but removing the investment income.
So as well as loosening the planning laws, the Government needs to set a vision for the future for town centres; we need streetscapes, turnover rates, and a deadline for every local authority to put in place a town centre master plan. We are now a ‘lifestyle’ society so the focus needs to be on what makes a town centre a place to choose to go to socialise and have a great day out. Why can’t our town centres be dotted with children’s play areas? Why can’t we encourage the private sector to put in free alfresco internet hubs on our high streets where once we had telephone boxes? Why can’t this be the year that all national lottery-funded art simply has to go to our high streets? Let’s encourage lifestyle providers to our high streets, such as hairdressers, nail salons and fitness centres, making the high street the place to go and get ready for a night out
And why can’t all building refurbishment in town centre development zones be VAT free? That way there would be a presumption towards refurbishing our deserted department stores. Inevitably a number of lower rise buildings will need to go. Our town centres lack people and we must bring them back. This new legislation, if used effectively, could make it possible.
It is so sad when you drive into a town centre only to see shops crudely bricked up and poorly repurposed as housing. It is time for a robust strategy and a design framework to re-claim these areas with housing that is as uniformly pleasing as our much-loved out-of-town streetscapes.
Arguably the world is now brand-driven. So if ‘Dreams’ and ‘Sports Direct’ can boast that acceptable percentages of their stores are ‘in town’ we need to tell British business that the best community initiative you can have is to send the message that ‘cool brands are in town’.
Out-of-town retail floor space has been increasing for decades, while in-town space fails. The economic fall-out from Covid-19 and the ever-increasing trend for online shopping is set to reduce retail footfall even further. So if by encouraging local government, planners and developers to work together to move the consumer into an experience-led high street within walking distance of home, then maybe we stand a chance of starting the revival we all want to see in our towns and cities.
What do you think? Will the Government’s legislation make a real difference to our high streets? We’d like to hear your comments.
The Law Commission report into leasehold reform is a timely announcement, as the Government looks to restart the housing market. But we sound a note of caution.
The proposals, announced on 21 July, to streamline and simplify the process of buying the freehold of a leasehold property are especially welcome – not least because every lease is getting shorter. However, it is debatable whether the changes set out in the report will equitably offset the proposed extension to permitted development rights that was announced earlier this month. This would allow certain building owners to add another two storeys to residential blocks without planning permission, increasing what is known as the ‘hope value’ of a building, and therefore making the purchase of the freehold of a building more expensive. So despite the clear benefit of the proposed reforms, the Government could simply be giving with one hand and taking with the other.
Improving leaseholders’ right to manage their building is also welcome, especially in smaller blocks where, if there is harmony among leaseholders, self-managing may be an option. This means insurance commissions can be saved, and budgets and major works plans can be set by those who want to maintain their asset value, rather than by an absentee freeholder who, disillusioned by the diminishing value of his reversionary interest, may have given up!
The Law Commission’s report into leasehold reform also carries the oft-repeated call for converting leasehold flats into commonhold. Unfortunately this is not as simple a solution to the woes of leaseholders as people think. In fact, it would create a lot of grey areas around building management – and would impact the ability of managing agents to stand as directors for Resident Management Companies because not one leaseholder can be found to step forward as a director.
Commonhold is not a silver bullet; like all forms of tenure it comes with its own problems. Many institutional investors such as pension funds and insurers have invested in freeholds and ground rents provide them with an important income stream to match their liabilities. So with many major investors losing out on revenue during the Covid-19 outbreak as shopping centres and offices have remained closed, any move towards commonhold must be made while bearing this fact in mind.
For more on leasehold reform read our previous blog here.
Today’s draft Building Safety Bill has been a long time coming. But we hope it will be a major step forward in improving levels of safety in residential blocks. The new legislation is based on the recommendations of Dame Judith Hackitt’s building safety review, which was carried out in the wake of the Grenfell Tower fire in June 2017. The Government accepted the review’s recommendations in full and today’s draft Bill, which sits alongside the Fire Safety Bill published in March, sets out how they will be taken forward.
For leaseholders, the proposals will mean big changes to the way safety in your block is managed and regulated.
A new role of the ‘Accountable Person’ will be created to make sure there will always be someone responsible for keeping residents safe in high rise buildings – blocks that are 18 metres high and above. Whoever takes on this role will also have to listen and respond to residents’ concerns and ensure their voices are heard.
A new national regulator for building safety is being created within the Health and Safety Executive. This new regulator will ensure that high rise buildings and their residents are being kept safe; it will have new powers to raise and enforce higher standards of safety and performance across all buildings. The regulator will appoint a panel of residents who will have a voice in the development of its work.
In future residents and leaseholders will be given access to safety information about their building so that they can have an input and ensure any issues they raise are listened to.
There will be new complaints handling requirements to make sure effective action is taken when concerns are raised.
A new ‘building safety charge’ will make it easy for leaseholders to see and know what they are being charged for when it comes to keeping their building safe. But, to make sure that these costs are affordable, the costs that can be re-charged to leaseholders will be limited.
For the first time, new build homebuyers will have their right to complain to a New Homes Ombudsman, protected in legislation, and developers will be required to be a member of the scheme. The New Homes Ombudsman will hold developers to account and will have the ability to require developers to pay compensation.
We welcome the new Bill and we are also pleased to hear the Government’s stated commitment today “to making sure that leaseholders won’t pay unaffordable costs for historic repairs to their buildings”. The Government says it will continue to engage with stakeholders, including leaseholders, on this issue while the draft Bill is being scrutinised by Parliament. It has also committed to “speeding up work with the finance and insurance industries, to protect leaseholders from unaffordable costs of fixing historic defects, but without relying on taxpayers’ money”. And recently raised insurance issues around building safety will also be tackled.
This is all good news. Let’s now hope the government can deliver all it is promising without delay. It has been three years since Grenfell. Leaseholders in blocks around the country badly need action – they can’t afford to wait any longer.
You can read the new Building Safety Bill in full on the Government website here.
Mortgage lenders are to ask the Secretary of State for Housing, Communities and Local Government, what recent assessment he has made of the effect of the installation of External Wall Systems (EWS) on the ability of leaseholders to sell properties fitted with flammable cladding.
response to a question in Parliament earlier this week, Housing Minister
Christopher Pincher has confirmed that mortgage lenders are to review their use
of External Wall System or EWS1 forms.
Housing Minister said the Government is aware that some lenders are requesting
valuers use the EWS1 form on a wider scope of buildings than was intended and he
accepted that “this may be having a negative effect on the mortgage market for
such buildings”; a master[piece of understatement, given that hundreds of
leaseholders around the country are finding it impossible to move or re-mortgage
as a result of these forms.
the situation may be improving now that the Minister for Building Safety has held
a roundtable with mortgage lenders, who agreed a more “nuanced approach to risk
is required”. According to Christopher Pincher, they are reviewing their
policies and guidance to valuers on the use of the form. If true, we hope any
re-think is quickly translated into action for those flat owners who are
desperate to sell their homes but whose flats have been blighted by zero
valuations from mortgage lenders.
Ringley Group MD Maryanne Bowring is an expert speaker on the topic of EWS1 forms and their impact on the leasehold market. She says “I have heard of a case where a mortgage valuer requested an EWS1 form on a bungalow – which seems just blatant abuse of the intended purpose. Since government guidance changed to require that ‘anything that assists a fire’ on the ‘external wall system’ needs to be addressed, and that this applies to all buildings irrespective of height, the common sense principle of means of escape certainly in lower-rise buildings seems to have been wholly overlooked”.
We support a review of guidance and
are concerned as to the blight affecting many homeowners, not only struggling
to sell but to remortgage too.
Flood risk is a major problem for millions of homeowners. So a new strategy to make homes more resilient and improve flood management is good news. Yesterday the Environment Agency set out a plan to better protect and prepare millions of homes and businesses in areas where flooding is a problem.
The Agency estimates that
more than 5.2 million properties in England are already at risk, and climate
change will lead to even more people being affected. With more extreme weather
expected, including summer temperatures up to 7.4˚C hotter and 59% more
rainfall by 2050, the new Flood
and Coastal Erosion Risk Management Strategy sets out how to tackle the
problem during the next decade.
Measures will include:
Expanded flood warnings by 2022 to all at-risk properties, with 62,000 more families to be added to the service
Increased investment in natural flood management schemes to better protect communities, tackle climate change and create new wildlife habitats
Further promote the use of property flood resilience measures to help homeowners recover more quickly from flooding
More collaborative partnerships with national road, rail and utilities providers to promote better flood resilience and benefit the public.
There will also be reforms to
the FloodRe insurance programme based on a review of the scheme published last
July. Flood Re is a government insurance scheme that gives access to
affordable insurance for hundreds of thousands of homes at high risk of
The proposed changes include:
offering discounted premiums to households that have fitted flood resilience measures such as airbrick covers or non-return valves.
claims payments to include an additional amount to help homeowners refurbish their damaged property in a more flood resilient way.
This news is very welcome, especially as climate change makes widespread flooding likely to become more frequent. To read more about what to do if your home is threatened by rising floodwater, read our blog on this topic here.
Leasehold reform hasn’t made much progress lately, despite the much-publicised promise last year of new legislation to benefit homeowners. The Queens Speech in December noted the Government’s intention to reform unfair practices in the leasehold market. But no date was given for when new legislation might be introduced. Clearly, the pandemic has put less urgent Government business on hold. Now questions are being asked.
Flat owners will be pleased to
hear that Clive Betts MP, the chair of the Housing, Communities and Local
Government Committee has written to the Housing Minister Christopher Pincher,
asking him to outline the Governments’ current timetable for the introduction
of reforms and to detail any interim measures you will put in place in the
Mr Betts doesn’t mince his words. While the Committee appreciates that the Government will want to wait for the Law Commission to conclude its ongoing review of existing leasehold law, it is vital that the abuses this committee uncovered are addressed, he says. He is clear that leaseholders continue to suffer from onerous ground rents, permission fees, opaque and excessive service charges, and high enfranchisement costs and they are understandably desperate for these to be remedied as a matter of urgency. Add to this the ongoing cladding scandal which is impacting thousands of leaseholders around the country and the Government’s record for rapid resolution of the serious issues impacting leaseholders doesn’t look good.
We support Clive Betts’ call to speed up the much-needed reforms revealed last year. However, leasehold and the relationship between freeholders and flat owners – is complex. For example, setting ground rents at zero benefits residents in the short term but may lead to freeholders, denied of an income stream, not bothering to take an interest in good quality asset management, to the detriment of leaseholders and leading to decaying housing stock.
Right to Manage may provide a remedy to this problem but, in our view, one of the biggest problems that remains unaddressed is that once acquired by leaseholders, this right is not transferable. This is a diminishing disaster. What it means is that as flat owners move on, the annual costs of running the RTM company fall to fewer and fewer people. The end result is that one leaseholder could end up shouldering all the costs. This can’t be right and must be fixed.
So we welcome Clive Betts timely intervention but urge the Government to make a real effort to understand how leasehold works on the ground. We think some of the proposed reforms could have unintended consequences for flat owners and the blocks they live in. What do you think?
If you are struggling to sell your property with a short lease, wanting to enfranchise or claim your right to manage, then Team Ringley can help.
Would you like to buy your freehold? If so, start the process now. This is the advice from Ringley Group MD Mary-Anne Bowring who is urging flat owners to get the ball rolling before new planning laws come into force in September. Radical planning reform announced this week could have unintended consequences for leaseholders, she warns.
On Monday, the Prime Minister announced changes to the planning system that aim to make it easier to repurpose empty retail and commercial premises and redevelop them as new homes instead. So far, so good. But under the new rules, freeholders of purpose-built residential blocks will also be able to build additional space above their properties via a fast track approval process. This will be subject to neighbour consultation but could have a negative impact on flat owners in blocks around the country who want to buy their freehold.
A planning policy paper is expected later this month, setting out proposals to reform England’s seven-decade-old planning system. The changes are then expected to come into effect by September 2020.
Here’s the Ringley take on what the changes could mean for flat owners. The valuation method used under current legislation for leaseholders who want to enfranchise and buy the freehold of their block of flats provides for ‘hope value’ in the freehold interest. Hope value can include the market value of land, or roof or airspace development rights based on the expectation of getting planning permission for development. The proposed new legislation just made the hope value of roof or airspace development less of a hope and significantly more of a certainty!
The hope value of extra flats that could be built on top of blocks under the proposed planning changes becomes a positive presumption, which will impact the enfranchisement valuer’s calculation of the hope value to be included in the enfranchisement premium. So if we take the example of a block where all the leases are long leases with more than 80 years unexpired and therefore there is no ‘marriage value’, the enfranchisement premium would be circa 20-25 x the ground rent plus the present value of the freehold deferred by the number of years the leases had unexpired. To buy the freehold, each leaseholder would pay a percentage of this total in relation to their flat as well as a share of what is left for the flats who are not participating, including hope value. But under the proposed changes, in theory, the premium for leaseholders would increase because the certainty of the hope value for buildings purpose-built and constructed between 1 July 1948 and 5 March 2018 will be a fast track approval process.
Another issue that looks unfairly weighted against leaseholders – and may end up being left for the courts to determine – is whether it is physically possible to build additional storeys in the first place. Some blocks may not have sufficient structural bearing capacity in the original design to do so but it could take flat owners a lot of money to prove that this may be the case and doubtless, some leaseholders will suffer. It also means that freeholders of purpose-built blocks constructed between 1 July 1948 and 5 March 2018 will be in less of a rush to create roof space leases to increase the enfranchisement price by creating a degree of certainty of further development. Needless to say, for blocks constructed in this time period the weighting of the hope value for enfranchisement purposes will significantly shift!
So our advice to leaseholders wishing to buy their freehold is to start the process and get their S13 notice in as soon as possible before this becomes law in September.
Our in-house legal practice Ringley Law has many years of experience in enfranchisement and is happy to advise flat owners on the best way to proceed. You can also read our guide to buying your freehold on our website here https://leaseholdguidance.co.uk/. Or read more about it in our Freehold Enfranchisement e-book at https://ringley.co.uk/ebooks