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.


Is this the beginning of the end for ground rent?

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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.

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.

Make lease extensions easier, say experts

Will Housing Minister Esther McVey listen to ALEP’s plea to drop the two-year rule?

A group of leasehold experts is calling on the government to make it easier for flat owners to extend their leases. The Association of Leasehold Enfranchisement Practitioners (ALEP) has written to Housing Minister Esther McVey, calling on her to review and improve flat owners’ rights. In particular, the letter highlights the two-year wait rule.

This means that, as the law now stands, leaseholders must have owned their property for at least two years before they are eligible to extend their lease. ALEP argues that this is inconsistent with a flat owner’s immediate legal right to join in with other flat owners to acquire the freehold of their building. Some flat buyers can avoid the two-year rule if the sellers had already qualified for a lease extension and had formally brought a lease extension claim – but they are in the minority. 

The law allows eligible flat owners to extend their lease by an extra 90 years on top of the remaining lease term with the ground rents becoming a peppercorn (in other words, the rent is eradicated to zero).  But as ALEP director John Midgely point out, the lease of a flat is a depreciating asset. If a new owner has to wait for at least two years to be able to exercise his or her rights, it could cost them a significant sum to extend their lease. 

Leasehold legislation (including lease extensions) are under review as part of the government’s pledge to reform the leasehold sector. But any reforms are likely to take time to come into force. ALEP thinks modifying the two-year rule is a modest change that could hugely benefit flat owners and wouldn’t be difficult to implement quickly, hopefully as part of a future Housing Bill.

At Ringley, we’re in favour of any rule change that makes it easier for leaseholders to extend their leases. We know the current system can be complex for flat owners to understand and so we offer advice on lease extensions via Ringley Law. Our solicitors can take leaseholders through the process to make it as simple a possible and get the best value from your property. We also have an E-book available to download on our website that explains the lease extension process in detail.

So if your lease is coming up to the crucial ‘80-years unexpired’ in the next year or two, check out the lease extensions information on our website, download the guide and give us a call if you need more information.

Queen’s speech promises new safety standards

Dame Judith Hackitt, chair of the Independent Review of Building Regulations and Fire Safety.

Yesterday’s Queen’s Speech included a pledge from the Government to “bring forward laws to implement new building safety standards”. This follows on from Dame Judith Hackitt’s independent review commissioned in the wake of the Grenfell Tower fire in 2017. The report makes 50 recommendations to the government – a complete shake-up of the way blocks higher than ten storeys are designed, constructed and managed, with safety at the heart of the proposals.

A huge raft of consultations is now underway, looking at ways to make Dame Judith’s recommendations workable on the ground.  One proposal which will impact high-rise flat owners and their property managers day-to-day is the introduction of the new role of a “clear and identifiable duty holder” for every individual block or development. This ‘approved person’ will have an overarching responsibility for managing building safety risks; for maintaining the fire and structural safety of the whole building; and for identifying and making improvements where possible.

The intention is for this role to work in the same way as the duty under health and safety legislation to ensure the health, safety and welfare of employees. Non-compliance could be a criminal offence, with severe penalties imposed. The dutyholder will also be required to nominate a building safety manager, who will act as a point of contact, taking on the task of resident engagement – also key to Dame Judith’s proposals.

As we understand it, the role of dutyholder would be unpaid. It is not a professional position but one that could be taken on by a leaseholder, in the same way that residents sign up to be directors of their RMC. But who will want to take on such an onerous responsibility?

One suggestion from Andrew Bulmer, CEO of the Institute of Residential property Managers (IRPM) is the appointment of an external director to an RMC to take on the role. No external person would do the job for free and the charge for their services would presumably have to be met by the leaseholders via their service charge. This is unlikely to be popular!

This director would also need to be given the necessary authority to fully manage the building and discharge their responsibilities, says Andrew. Leaseholders would have to be able to rein in a rogue external director and, if necessary, sack them. And what about conflicts of interest between that director and the property manager? He or she would have to remain answerable to the leaseholders and not be able to simply remove a managing agent they didn’t like. Plenty of food for thought here.

With a whopping 122 consultation questions included in Dame Judith’s final report, it will take some time to develop a new, reasonable and practical safety regime for high rise blocks. We don’t have the answers to these questions yet but one thing is absolutely certain – in the next two to three years the way property managers work with residents to keep their buildings safe is likely to change out of all recognition. Let’s hope this brave new world is a positive one for agents as well as residents.

Will your new home meet the ‘green standard’?

Last week, the Government set out plans to cut the carbon footprint of new homes. As Extinction Rebellion take to the streets, disrupting cities around the country to draw attention to climate change, this seems a timely move.

Housing secretary Robert Jenrick has revealed plans to change the building regulations and develop a ‘Future Homes Standard’. This could ban gas boilers and oil heating from all homes built after 2025, replacing them with cleaner technology such as air source heat pumps and solar panels. Local authorities are also being asked to play their part in demanding better energy standards from developers.

To get a wide range of views on these proposals,  a consultation has been published looking at ways to drive down the carbon footprint of houses, including changes to ventilation and energy efficiency requirements. If you would like to put your views forward, you can download the consultation paper, which will run until January 2020, here.

Ahead of an Accelerated Planning Green Paper, to be published in November, Robert Jenrick also confirmed his aim to speed up the planning system. Proposals include:

  • fees to be refunded by councils if planning departments take too long to pass applications;
  • simplified planning guidance; and
  • a review of application fees to ensure that planning departments are properly resourced.

There are also moves to reduce the raft of planning conditions by a third and to promote the idea of building homes above existing buildings as well as demolishing old commercial buildings for new housing.

And that’s not all. Design is also in the spotlight.  New research from FJP Investment has revealed that homebuyers are less-than-impressed by new-builds. The independent survey of 1,000 homebuyers and property investors found that 50% of us feel UK new-builds are unattractive –  and 63% think they are “devoid of character”.

Plans for a new national design guide that aims to ensure delivery of “beautifully designed homes” could help. The new 64-page guide will identify ways to achieve good design, and will set out what developers need to do to get that all-important buy-in from local communities. There are also calls on for local authorities to develop their own design codes in line with their region’s character.

This all sounds like good news. Identikit boxes that attempt a vague nod at the local vernacular are all too common around the country. No wonder potential buyers aren’t impressed. Developers must work harder to build affordable, energy-efficient homes with genuine kerb appeal. If the new ‘green standard’ and (hopefully) streamlined planning rules go some way to achieving this then they must surely be a step in the right direction.