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.

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!

Leasehold reform – there’s more to come!

Yet more reform is on the table and is set to affect anyone with a leasehold home. Yesterday, the government responded to the Housing, Communities and Local Government Select Committee’s report on Leasehold Reform, and has come out largely in favour of the measures it is recommending.

More leasehold reform is on the way – but how long will it take?

Proposals include:

  • giving clearer information to consumers on how to buy and sell leasehold properties
  • Looking again at commonhold in light of the Law Commission’s recent report
  • working with developers on a standard ‘key features’ document so consumers have clear details of a lease before they buy
  • removing any financial value from future ground rent
  • ensuring the Law Commission is able to properly consider the use of unfair terms
  • updating planning guidance to ensure clear and transparent agreement between developers and local authorities on public areas and utilities to be adopted
  • considering recommendations on permission fees, major works (including a code of practice) and other charges.
  • exploring the best way to challenge unjustifiable legal costs, including looking again at legislation
  • exploring legal changes to forfeiture
  • extending compulsory membership of a redress scheme to all freeholders of leasehold properties
  • implementing improvements to the enfranchisement system as soon as possible

How long will these recommendations take –  and will some end up being watered down along the way? Nothing is certain. But what is clear is that there is now the will at policy level to make life easier for leaseholders. And that has to be good news.

If you are interested in reading the response document in full, you can donwload it here.

Too many cars!

To play fair, you can only park as many cars as you have spaces for on site.  Stands to reason, and you would think everybody could understand that.  Visitors parking is scarce and often visitors have to park off-site.  

In this case an action was started against the owner of the property whose tenants were flagrantly breaching the rules, day after day, night after night.  And, not ine cat at a time – typically 3 or 4.  

Once the landlord understood that our Client was serious they used our action to start taking breach proceedings against their tenants.  This resulted in the tenants moving on and RingleyLaw’s costs being covered by the owner.   Hopefully, with getting better tenants next time, this owner will make sure their Agent is clear on how many spaces come with the property and also get a previous landlord reference!

Balcony fires – don’t take the risk

Is your balcony a fire risk? Following the fire in June that raced through a block in Barking via wooden-clad balconies, the government now has an advice note to block owners and residents. Balconies must not compromise resident safety by providing a means of external fire spread, it says.  Balconies must be included in fire risk assessments. If they contain combustible material then they should be removed and replaced.

Don’t try this at home…

So building owners need to understand the materials used in the construction of balconies on their blocks. This way they will be able to assess whether adequate fire protection is in place to resist a fire spreading both across and through the external wall.  But owners aren’t necessarily either fire or construction experts. So if there is any doubt over the materials used or the risk presented, they should seek professional advice from a fire safety specialist.

Revisions to the Building Regulations introduced in December address the risks posed by balconies. The new regulations require balconies on residential buildings over 18m high to be made of non-combustible materials. But balconies on existing blocks like the one in Barking, may be made from combustible materials, so it is vital for building owners to do their homework properly.

Property managers can play their part by setting out a few simple rules stating what can and cannot be stored and used on balconies by residents. Here’s our advice:

  • Don’t use balconies as storage areas – particularly for anything that might be flammable.
  • If balconies are used as smoking areas, make sure that cigarettes are properly extinguished and disposed of. The same goes for candles.
  • And most important of all, never barbeque on your balcony. A significant number of fires in flats start this way. Not only is it clearly dangerous but your block insurer will take a very dim view of any claim for fire damage resulting from an out-of-control barbeque.

Make sure residents know what is and isn’t acceptable – and why. Use the block newsletter, website, the AGM or a social get-together to drive this message home. And don’t forget anyone sub-letting. It could save a life.

Right to Manage – we show you how

The Law Commission has announced it will publish its review of Right to Manage in February 2020. In the meantime, if you live in a block that is thinking of RTM, Ringley has an E-Book that explains the process.

Find out how to take control of your block with our
step-by-step online guide

Right to Manage is the no-fault process that enables a group of residents to take control of the management of their block. Our step-by-step guide explains what you will need to do if you and your fellow residents want to go down this route. Under the Commonhold and Leasehold Reform Act 2002, there are four tests that your block needs to pass in order to qualify. These are:

  • Are there two or more flats in your block?
  • Are there two leaseholders willing to be directors of the new Right to Manage Company?
  • Is your block self-contained?
  • Do at least two thirds of residents hold long leases (ie they are not renting their flats)?

If the answer to these questions is ‘yes’ you can go ahead and register your RTM Company. You will need to send out formal participation notices to the other residents and to your freeholder. You must also serve a claim notice on your freeholder and your managing agent telling them of your intention to exercise your right to RTM. If your freeholder disputes your claim you may need professional advice to deal with a counterclaim.

If your claim is accepted, you can go ahead and take control of your property. This will mean taking responsibility for maintenance, repair, collecting service charges and accounting, insurance and overall management.

These are not tasks to take on lightly. There is a reason why property management is undertaken by professionals and many RTM Companies, rather than manage their own buildings, employ a managing agent to do it for them. Under RTM, the choice of agent is theirs and residents are in control of their own homes.

As the law stands at present, a successful outcome is dependent on serving notices correctly and getting the process absolutely right. Ringley has years of experience helping flat owners to a successful RTM outcome. So download our E-book here and contact us today for more information. We’re here to help.

Fire safety – do you know the drill?

A devastating fire wrecked a block of flats in Barking at the beginning of June. No one died but the fire spread so fast that it could easily have led to loss of life, particularly as the residents reported that no alarms had sounded. Fire safety systems should always be regularly inspected and tested and – unless a stay put policy is in place – residents should evacuate the building immediately they hear the alarm.

Unfortunately, as fire risk specialists Lawrence Webster Forrest says in a recent blog, although the need for immediate evacuation may seem to be something of a ‘no-brainer’, studies have shown that people are reluctant to evacuate and are inclined to assume the fire alarm is a test or a false alarm. Clearly this is dangerous, so fire training in residential blocks is a must – and should be taken as seriously as regular inspections of fire safety equipment.

Do you know the evacuation plan in your block?

Thankfully most people have no experience of fires developing inside a building. This means they are likely to base their idea of how fire spreads on their experience of bonfires or other outdoor fires. But a fire inside a building represents an imminent threat to life. So in an emergency situation, evacuation must be completed as quickly as possible.

Property managers need to make sure residents know what to do and when to do it. This means helping them to:

  • familiarise themselves with escape routes, which may not be used on a daily basis.
  • Understand how to use exit devices on fire doors. These should be demonstrated and residents given the opportunity to operate one themselves.

It is important that residents know not to use lifts when the fire alarm has sounded. Also, everyone should be familiar with plans to evacuate neighbours with disabilities or who are particularly vulnerable. Knowing who is responsible for helping particular fellow residents could mean the difference between someone evacuating the block safely or being trapped in their flat.

So if you’re a property manager, make sure this is at the top of your list for your next residents meeting. And if you’re a leaseholder or tenant and don’t know what the evacuation procedure is in your block – ask. Don’t take the risk.