12 rules when extending your lease

Extending your lease – 12 good rules

The Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) provides leaseholders with the right to extend their lease; subject to certain qualifying criteria being met.

In brief, the Act provides the leaseholder with a right to extend the lease term by a further 90 years and extinguishes the ground rent. This is known as a statutory lease extension. The right is one of compulsion, as historically a Freeholder could demand a premium at its discretion or refuse a lease extension carte blanche.

Unlike a Freehold asset which grants ownership for an infinite period, a leasehold asset is an ownership for a defined number of years. Over the course of time as those years reduce, so does the value of the Leasehold property. Furthermore, as the term of the lease gets shorter, the premium payable for the extension increases. Therefore a lease is often described as a depreciating asset.

For the purposes of this article we are giving you the reader 12 good rules pertaining to the lease extension process. (Almost like the 12 good rules that were framed and displayed in many taverns in the 18th century and derived from a broadside showing a rough-cut of the execution of Charles I).

Extend your lease

1. Check the term of years left on your lease.

Warning! Please do not become complacent if you have a lease term over 80 years because you are fortunate. Now instead of putting away your lease and forgetting about the issue you should take the opportunity to at least get advice on the benefits of extending your lease using the Act. The effect is that you will pay a premium to obtain an additional 90 years to the existing term and the ground rent is reduced to a peppercorn. A lease term above 80 years does not attract marriage value.

2. First read up on the basics of qualifying.

Then contact a surveyor and solicitor who specialise in Leasehold Enfranchisement. The solicitor shall investigate whether you and the building qualify pursuant to the Act in the first instance and the surveyor shall provide an opinion on the likely premium to be paid for a lease extension. The surveyor will also provide a range to your premium, a lower premium that should be inserted into the section 42 Notice to allow room for negotiations.

Surveyor’s Tip: The Act states that the leaseholder’s figure stated in the section 42 Notice has to be realistic. A well-known elephant test may be applied as to whether a figure is realistic. This may be difficult to describe but you know when you see an unrealistic figure. Further to case law the test now would be a “genuine opening offer” i.e. a bona fide offer. Notably, the surveyor should be able to justify the valuation for the notice figure if it came to in the Tribunal.

3. The solicitor shall prepare the section 42 Notice which initiates the claim.

To assist the solicitor, you should forward your most recent ground rent and service charge demands, provide details of any managing agent and any further information you have in relation to the Freeholder’s address for service.

4. Once a valid section 42 Notice is served a strict timetable is triggered.

Instructing specialist advisers will mean your interest is safeguarded.

5. It is likely that a landlord will request payment of the statutory deposit once the notice is served.

This will be either 10% of the premium quoted in your initial notice or £250, whichever is greater.

Practical tip: Good finance management is important here. Upon receipt of your surveyor’s report you should discuss the amount to be set aside to cover the statutory deposit, and even consider paying into your solicitor’s client account prior to service of the Notice. The reason being is that upon receipt of the request for the statutory deposit, your solicitor has a period of 14 days to make the payment to the Freeholder’s solicitor to hold the deposit as stakeholder. This may need careful consideration if the quoted premium is high as you may need to have the sum readily available from the outset. Please note the deposit is offset on completion.

6. It is also likely that the landlord’s surveyor will require access to inspect the property for the purposes of completing their own valuation report.

You should bear this in mind if the property is tenanted and perhaps discuss this with your tenant from the outset that on notice you will advise the tenant to grant access.

Surveyor’s tip: Further to gaining access many Leaseholders ask if they should delay works to their property until after the Freeholder’s surveyor has inspected. In short, the answer to this question is no. The valuation principles for a lease extension (and enfranchisement for that matter) is unique in that the Valuer assumes that both the Leaseholder and Freeholder have complied with their respective obligations in the lease, which extends to internal and external maintenance. The Valuer therefore assumes that the property is in what is commonly referred to as “lease maintained condition”, with improvements disregarded, so do not be alarmed when your surveyor’s inspection takes 10-15 minutes rather than a full hour!

7. Once two months have lapsed from the date of service of the section 42 Notice you should receive a Counter Notice from the landlord.

If the landlord fails to serve a Counter Notice, the consequence is that the extension will be granted on the terms set out in your notice (i.e. potentially for the lower premium).

8. The landlord may offer an informal deal alongside the Counter Notice.

This will need some careful consideration, but for some leaseholders may offer the more attractive option, but advice should always be sought before making any decisions.

9. Upon receipt of the Counter Notice your surveyor will typically begin negotiations.

There is a two month period, the statutory negotiation period, whereby the surveyors try to reach an agreement.

Surveyor’s tip: Your surveyor’s report would have commented on lower, realistic and higher range figures.

10. Once the two month negotiation period is complete, your solicitor will reassess the progress being made between the surveyors and consider making an application to the First-tier Tribunal (Property Chamber) (the Tribunal).

If the surveyors are making some progress it is usual to allow further time to enable further discussions, however an application to the Tribunal must be made at least two months from, but within six months of the date of the service of the Counter Notice or the Notice will be deemed withdrawn. In other words, you must allow two months to lapse (statutory negotiation period) before having a further four months to make an application to the Tribunal. The timetable in leasehold enfranchisement is very strict and it is imperative to ensure the deadlines are not missed.

11. Once the Premium has either been agreed or determined by the Tribunal, hopefully the latter will prove unnecessary, the solicitors would agree the form of the new lease and proceed to complete the lease extension.

Tip: Once the premium is agreed and no changes to the terms of the lease are proposed, terms of acquisition are agreed at this point and you have four months to complete the lease extension. This is a strict deadline and failure to complete within this timescale would result in a deemed withdrawal (in the absence of an application to Court). We mentioned above the importance of finance management. If you are remortgaging it is important your solicitor and broker communicate regarding the timing of making an application for the remortgage and the drawdown of funds as you need to ensure the money is readily available to complete within the four months deadline.

12. A completion date will be agreed for the lease extension.

The property register at the Land Registry will be amended and you would have successfully completed the process and protected and added value to your leasehold interest.

SOURCE: http://www.flat-living.co.uk/advice/1901-extending-your-lease-12-good-rules

What You Need to Know About Type 4 Fire Risk Assessments

Do you carry out Type 4 Fire Risk Assessments?

One of the questions we are being asked more recently is whether or not we carry out Type 4 Fire Risk Assessments. The answer to this is yes. However, there is a lot to consider before instructing an intrusive risk assessment in your property.

What exactly are Type 4 Fire Risk Assessments?

The most common type of Fire Risk Assessment is the Type 1; which is non-destructive and of the common areas only.

Type 1 Risk Assessments are usually sufficient for most blocks of flats and you would have probably had one carried out fairly recently.

Type 4 Fire Risk Assessments (FRAs) however, include an intrusive assessment of both the common parts of the building and inside of the tenant’s demise. They are often referred to as a Compartmentation Survey, as they are usually suggested if there may be serious defects such as inadequate compartmentation and fire stopping.

Why are they becoming more popular/ asked about?

Type 4 Fire Risk Assessments are becoming more prevalent, particularly after the Grenfell tragedy. This is mostly due to the recommendations from the Hackitt Review and the Building a safer future: proposals for the reform of the building regulatory system: Consultation. For example, one of the recommendations from the ‘Building a Safer Future’ Consultation is to ensure “that fire compartmentation from the inside of a flat, including the front doors, is maintained to a suitable standard…” Type 4 FRAs may well be needed to determine further works to improve compartmentation, additional fire stopping measures or improvements to protect the means of escape from smoke or fire.

Concerns may be originally raised in the type 1 FRA about the compartmentation, especially in areas that cannot be easily accessed such as: ceilings, under floor boards, roof voids, risers, service cupboards or boiler rooms. In circumstances such as these, there may be reason to believe there is high risk of fire spread in both the private and common areas of the property and therefore a more intrusive assessment may be needed.

Furthermore, if a new landlord takes over a site that has little or no history of the construction and consequently no information on the compartmentation or fire stopping, they may ask that a Type 4 Fire Risk Assessment is carried out.

Dame Judith Hackitt has specified that there is a need to ensure that sufficient information is recorded throughout a building’s life cycle; known as the ‘Golden Thread of Information’. Some examples of the information that should be recorded, maintained and available include: full material and manufacturer product information, design intent and construction methodology, and escape and fire compartmentation information.

What do you need to consider?

A Type 4 Risk Assessment may be completely necessary in some circumstances, however, there are still some aspects to consider before you instruct one to be carried out.

For instance, the disruption to residents, the overall cost vs. benefit, and whether you will be able to gain access to the necessary flats.

Type 4 FRAs are more complicated than the other types of assessments. Access to flats can be difficult and the intrusive nature of the assessment will involve a contractor to open up and repair damage after the inspection.

In addition to this, if the building was constructed prior to 2000 it may contain asbestos and this will need to be carefully considered before any destructive works are carried out. If the building is Pre 2000 if it is then you must carry out a Refurbishment and Demolition (R&D) Asbestos Survey. An R&D survey (previously known as a type 3 survey) is required when materials are being disturbed as part of a refurbishment, demolition project (or other types of construction work any intrusive works). This type of survey is fully intrusive and the building or areas which are being surveyed will usually need to be vacated so that extensive surveying and samples can be taken.

Will It Get Cheaper For Leaseholders To Buy Freehold Or Extend Leases In The Future?

We wanted to share this article as we know many of our customers have asked us this questions and the future of this is still uncertain. In this article Laura Severn, Director at LMP Law, answers this question.

In last year’s article in Flat Living, I have become acutely aware that consumers are become savvier with their knowledge of the property management industry and leasehold ownership, which I think can only be a good thing.

The Government has been really busy of late (I wonder why….), but they are still progressing with leasehold reforms for better consumers’ rights, meaning that great property managing agents and genuinely hard-working landlords will be safer in their place in law. With more transparency it gives the agents and leaseholders more awareness and understanding of the law and the rights surrounding leases.

More than six million properties in England and Wales are leasehold, according to the Leasehold Knowledge Partnership, so it’s imperative the law, property managing agents, developers, surveyors and leaseholders work closer together.

Law Commission

You may or may not have read or heard the latest news from the Law Commission, which has published options for reforming valuation in leasehold enfranchisement. It’s a subject that has been widely discussed over many years now, and we’ve seen experts parachuted in from international sources to speak and educate our UK system whilst dovetailing talks with the Government, developers and property management professionals.

The policy objectives of enfranchisement reform identified by Government are:

  • to promote transparency and fairness in the residential leasehold sector
  • to provide a better deal for leaseholders as consumers
  • to simplify enfranchisement legislation

Why now?

For a long time now the subject of residential leasehold has been the subject of prominent policy debate. Concerns have been raised about many aspects of the leasehold market.

Why?

  • Mainly because of some escalating ground rents (such as the imposition of rents which can double at periodic intervals during the term of the lease). Another reason why we, as property law specialists, advise managing agents and leaseholders on the value of understanding their lease and when extending a lease to instruct a qualified lawyer who is a specialist in property law;
  • leasehold homes being hard to mortgage or re-mortgage because of escalating ground rents, making the properties deemed unsaleable and trapping the owners in their homes;
  • houses being sold on a leasehold basis, as opposed to freehold, basis, for no apparent reason; and
  • charging by landlords of unreasonable permission fees to carry out alterations to a property.

So, What Are The Options?

The options have been researched in essence, to make it cheaper or at least “fairer” for leaseholders to buy their freehold or extend their lease. Not only are the reforms looking to help provide potential cost reductions for the leaseholder, but also to provide clarification about the valuations provided in leasehold enfranchisements.

Options:

A review of the process regarding leaseholders’ rights to:

  • participate, with other leaseholders, in the collective purchase of the freehold of a group of flats
  • extend the lease of their house or flat
  • purchase the freehold of their house

So What Does This Mean For Flat Owners?

Flats are generally owned on a leasehold, as opposed to freehold, because of certain obligations required to pay money or to perform an action in relation to that property (such as to repair a wall or a roof).

The reforms aim to benefit leaseholders by reducing the cost that they have to pay to buy the freehold or extend the lease of their homes (known as “enfranchisement”), plus making the process simpler.

Comments

Further to the Law Commission’s report, there have been many comments, including:

The Housing Secretary Rt Hon Robert Jenrick MP commented:

“…We have already committed to addressing the abuses of leasehold seen in recent years, by reducing ground rents to a peppercorn level and limiting new leasehold to apartments, save in the most exceptional circumstances. The Competition and Markets Authority is examining the alleged misselling of leasehold properties and I will also await their findings with interest.”

Professor Nicholas Hopkins, Property Law Commissioner said:

“We were asked to provide options for reform that save leaseholders money when buying their freehold or extending their lease, while ensuring that sufficient compensation is paid to landlords. This is what we’ve done.

“We are ready to help the Government in implementing whichever options for reform they choose.”

Conclusion

Transparency and fairness can only be a good thing for UK residential living. We are a nation of home lovers and to be able to understand our property, our lease term, ground rent and general legalities surrounding it, can only be a positive step. So many of the flats we live in are managed by exceptional property management agents and as I’ve mentioned before, knowing the value of a lease is vital to ensure that all steps are taken to protect or enhance it.

Ultimately, anyone thinking of buying a leasehold property should go through the contents of the lease with a solicitor to understand what is expected of them. Have open chats with your managing agent and be sure of all the terms and conditions before you sign on the dotted line, it could avoid disputes arising in the future and watch this space as to whether the proposals will be put in to action.

 

Storage solutions for your flat

If you live in a house there are always options to  extend your living space, whether it’s a conservatory, extension, loft  or even cellar conversion.

If you live in a flat how can you extend your living space?

Clever interior design can assist in  getting better use of the space you have, and you can create extra space  by remodelling awkward spaces.

Most flats struggle with storage space,  in mansion blocks and converted properties which enjoy high ceilings  the space can be better used with floor to ceiling cupboards. You can  use the higher sections of the space for things used less often and the  lower cupboards for items you use regularly.

Cleaning up your internal space by  putting clutter in strategically placed cupboards will make your  apartment feel much bigger automatically.

In older converted blocks of flats and  apartments the layout often wastes space. Unnecessary corridors and  walls, which could make rooms much larger and useable once removed  (always check with the terms of your lease before you make any  alterations.)

When making alterations to an older  property it is always worth spending a little more on good plastering  and reinstating period features such as coving and architrave and always  try to obtain skirting that matches that in the original part of your  property to finish.

Before moving or removing an internal  wall you should consult a structural engineer to see whether they are  load bearing. If the walls are load bearing its prudent to consult a  structural engineer to ensure that adequate Rolled Steel Joists (RSJs)  are used to hold the weight. You do not need planning permission to make  internal alterations to a flat, but you will need to complete a  Building Notice with your local authority to ensure you comply with  Building Regulations. Inspectors will visit you at each stage to ensure  that the work is carried out correctly.

Any alterations to shared walls or  structures will also require a party wall agreement with the owner of  the neighbouring property.

Don’t think you have the space in your small living room for storage? Struggling to make your studio flat work? Make every inch of your home work hard with well-thought out and space-saving storage solutions. Every nook and cranny is crying out for your clutter, so take charge of your belongings and banish them to hidden or well-organised areas.

For more inspiration and ideas check out Ideal Homes blog –

Storage solutions for small spaces – 22 brilliant ideas to store more in limited space

Storage solutions for small spaces

If you are renovating your house, think about building storage space into the walls: Cubbyholes in the bathroom wall will create space for all of your toiletries, without using up valuable room around your bath or shower.

Alcoves are the perfect space to build storage units and shelves that will fit seamlessly into your rooms, without taking up lots of space. Design a new kitchen with storage solutions in mind. Sliding cupboards that can hold hundreds of ingredients before slotting back in line with your units are a great storage idea for a contemporary scheme.

If you aren’t completely redecorating your home, invest in multi-purpose storage units that will only take up a single area in one room, but will store everything you need for the whole house. Here are some of our other storage solutions for small spaces.

Tory MP demands rental MOTs and compulsory landlord accreditation

A Conservative MP claims there is a major power imbalance between tenants and landlords and widespread reforms are required to stop renters being ‘left out on a limb’ because of poor property conditions.

Jo Gideon, Tory MP for Stoke-on-Trent Central, says in a report by think-tank UK Onward that there are three areas of improvement urgently required.“First, we must ensure that adequate housing standards and living conditions are applied to the private rented accommodation, in the same way they currently apply to social housing” she says.

Gideon suggests this could take the form of a housing MOT that assesses the quality of private rental sector accommodation and stops poor landlords “shirking their responsibilities.”Secondly she says landlords should be required to join a local accreditation scheme.

“Currently, around 500 landlords in Stoke-on-Trent are part of the local accreditation scheme, but this represents a small proportion of the overall sector. The scheme needs teeth to encourage better management, quality and supply of housing in the sector.”

Thirdly, she says the imbalance between renters and landlords in general should be addressed.

“On the one hand, many renters do not complain of poor living conditions out of fear of eviction. On the other hand, landlords need the power to acquire their property in the event of a bad tenant. The upcoming [Renters’ Reform Bill] must get the balance right for both renters and landlords and not tip too far in favour of one or the other.”

In her contribution to a roundtable hosted by the think-tank – alongside campaigning charity Shelter – Gideon says one of the housing issues in her constituency is what she calls ”absentee landlords.”

She adds: “The problem is that some of those landlords do not provide housing that is decent or fit for purpose. Much is old or in poor condition, and problems are often not dealt with quickly, leaving renters out on a limb. The upcoming Renters’ Reform Bill provides an opportunity to make a series of fundamental changes to fix these problems – and give my constituents a secure place to live.”

Source: Landlord Today

Cladding External Wall System (EWS) FAQs

In this article published by RICS it outlines some of the frequently asked questions regarding the issue of cladding and external wall systems. Read the article to find out more information:

1. What is an external wall system?

The external wall system is made up of the outside wall of a residential building, including cladding, insulation, fire break systems, etc.

2. What is the EWS1 process/ form?

The EWS1 form is designed to be used for residential properties such as blocks of flats (including those owned by housing associations and social housing providers as well as privately owned), student accommodation, dormitories, assisted living, care homes and Houses in Multiple Occupation (HMOs).

The EWS1 form is not specifically designed for use of short-term accommodation such as hotels. EWS1 does, however, apply to an entire building or block so where required, may also be relevant to mixed use.

The EWS process, and resulting form, is a set way for a building owner to confirm that an external wall system on residential buildings has been assessed for safety by a suitable expert, in line with government guidance.

The EWS1 process delivers assurance for lenders, valuers, residents, buyers and sellers. The process was developed through extensive consultation with a wide range of stakeholders including fire engineers, lenders, insurers, valuers, and other cross industry representatives.

The process itself involves a “qualified professional” (see download on this page) conducting a fire-risk assessment on the external wall system, before signing an EWS1 form, which is valid for the entire building for five years.

The form was originally designed following Government advice regarding external wall systems on buildings above 18m and was created to ensure residential buildings over 18m tall could be assessed for safety to allow lenders to offer mortgages. Changes in Government advice in January 2020, brought all residential buildings potentially within scope.

However not every building will require an EWS1 form. RICS has published guidance for valuers on 8 March 2021 and will be working with UK government and other stakeholders to ensure the guidance is implemented by 5 April 2021 and this guidance includes criteria that will be used to help decide whether a particular building should need an EWS1 form. Valuers will always need to follow instructions given by their lender clients.

The criteria considers the height of the building, the type of cladding and (in some circumstances) how much of it there is on the building. There are also criteria relating to balconies and combustible material. You should always have a rationale to justify the request for the EWS1 form.

3. Does the publication of the revised EWS1 form on 8 March 2021, render any existing completed EWS1 forms obsolete?

No, they remain valid until such time as a new EWS1 form is completed.

4. Does each flat/ apartment have to get an individual EWS1 form for selling, buying, or re-mortgaging?

No. Each EWS1 form is valid for an entire block/ building. It is valid for five years.

5. How does the EWS1 form factor into the buying, selling or re-mortgaging of a flat/ apartment?

The EWS (external wall system) process, is agreed by representatives for developers, managing agents, fire engineers, lawyers, lenders, insurers, and valuers, and has been adopted across the industry.

Its purpose is to ensure that a valuation can be provided for a mortgage or re-mortgage on a property which features an external wall cladding system of uncertain make up, something that has both safety implications and which may affect value if remediation is required due to the fire risk associated.

The process results in a signed EWS1 form per building, with two options/ outcomes:
(A) external wall materials are unlikely to support combustion
(B) Combustible materials are present in an external wall with sub options of either, fire risk is sufficiently low that no remedial works are required, or fire risk is high enough that remedial works are required.

The EWS1 form itself certifies that the external wall cladding system has been assessed by someone who is suitably qualified to do so. A list of suggested bodies for a building owner or their agents to contact to source fire experts can be found here.

While the form applies to residential buildings, changes in Government advice introduced in January 2020, mean that all residential buildings of any height with a wall system may need to be risk assessed. RICS has produced guidance to help valuers decide when an EWS1 form should be required.

It is also important to note what the form will not do. It is not a life safety certificate. It is only for the use of a valuer and lender in determining if remediation costs affect value. Where a building is found to need remedial works this will need to be carried out by the building owner, to ensure safety of the building, before a mortgage can proceed unless the lender agrees otherwise.

RICS welcomed the Secretary of State announcement in February 2021,on the additional funding for the removal of dangerous cladding in all qualifying residential properties over 18m. Government funding is something RICS have long called for, and whilst we recognise the complexity of the funding mechanisms, it is critical that any loan scheme for sub-18m blocks should be affordable and viable.

6. If the building owner has not proactively tested the external wall materials what does the seller need to do?

The seller can request that their building owner or managing agent commission an EWS assessment, and / or enquire as to the make-up of the wall system. The building owner or managing agent is responsible for confirming what materials are on their building, and in respect to the EWS1 form, the person responsible for the building needs to confirm what the wall system is made up of and whether an assessment is required.

7. Can the buyer or seller initiate the EWS process if the building owner has not?

The EWS process/ form is for building owners to undertake. Both sellers and buyers should be in contact with the building owner or their agent to ensure this takes place as quickly as possible.

8. If the building owner will not undertake the required assessment, what can the owner/lender/valuer do?

If the building owner does not acknowledge their responsibility and refuses to undertake the necessary assessment, the local council can provide further advice, or it should be referred to the Fire and Rescue Service. No one should be living in a building which is unsafe, and the building owners are the only ones who can progress this.

Building owners have a clear responsibility reinforced by MHCLG advice to arrange for the wall system to be checked and therefore have a route to remediation where needed. Leaseholders should continue to engage with the building owner or their managing agent to ensure this happens.

RICS is working with Government and other stakeholders as part of the Fire Safety Bill, which is due to gain Royal Assent in 2021

9. Who carries out the EWS assessment, and what is their expertise?

The EWS1 form must be completed by a fully qualified member of a relevant professional body within the construction industry with sufficient expertise to identify the relevant materials within the external wall cladding and attachments, including whether fire resisting cavity barriers and fire stopping have been installed correctly.

In addition, in January 2021, RICS launched a new training programme for chartered building surveyors and chartered building control surveyors, to enable them to undertake external wall system assessments for low to medium rise residential buildings. The newly qualified professionals will help increase the number of professionals qualified to carry out such assessments and support the current market demand. Buildings over 18m or those which are high risk and require specialist testing will still require a qualified fire safety engineer.

We have been made aware that unqualified people may be signing off EWS1 forms. RICS condemns anyone using the current situation for their own personal gain, with potentially dangerous consequences for residents, and would urge that any further information related to this is made available to trading standards and RICS if appropriate.

UK banks and building societies have robust measures in place to protect people against fraud, which would pick up any EWS1 form that is suspicious, but we encourage everyone to check the signatory on a form with the profession’s institution. If an RICS member is completing your EWS1 form, you can check their membership with us on our website. There is a list of suggested bodies to contact to source fire experts. This list is not exhaustive, nor does it constitute an endorsement or approval from RICS, UKF or BSA, and other bodies with relevant expertise may be able to assist. Anybody instructing an EWS1 form must be satisfied that the signatory meets the requirements as described above.

10. How will the assessment be carried out?

This is up to the expert undertaking the assessment, but it must include evidence of the fire performance of materials used in the cladding.

While paperwork submitted by the building’s original developer and/or owner can form part of the evidence, it cannot be solely relied upon. Photo evidence of the cladding will be required, or a physical inspection where this is not available or inconclusive.

In some cases – even where all attempts to establish the cladding system have been taken – the make-up and composition of the external wall system may still be unclear. In such instances intrusive tests may be required, alongside a more detailed review by a professional of a higher level of expertise.

Such tests may involve a hole being drilled into the wall or a section of cladding to identify the external wall system materials and their composition. It is crucially important to identify the whole make-up of the external wall system and how it has been installed.

11. Why is an EWS assessment required every five years?

An EWS assessment is required every five years for each building or block. This means multiple sellers located in one block can use the same assessment to assist with the sale of their property.

Five years is intended to capture any renovation or adaptation work done to the building, as well as maintenance over that period.

However, a new EWS assessment may be required within the five-year period if substantial works have been completed to a property, affecting the original conclusions.

When the Fire Safety Bill comes into force, the building owners of all multi-storey, multi-occupied buildings in England will be required to undertake fire risk appraisals and assessments of their buildings, which includes, where appropriate, an assessment of the external wall system.

12. What happens if the EWS assessment identifies that remedial works are required?

If an external wall system requires remedial work then we would expect the valuer to take this into consideration in their valuation. A valuation will only be possible if there is clarity on cost of the work and a timeline for works to be completed. Lenders are unlikely to lend until remedial work has been completed, but some may choose to do so with retentions and the like based on their own risk appetite.

The EWS assessment is for the building owner to oversee, but the resulting form should be available on request to all occupants in that block in the interests of transparency.

RICS welcomed the Secretary of State announcement in February 2021,on the additional funding for the removal of dangerous cladding in all qualifying residential properties over 18m. Upfront government funding is something RICS have long called for, and whilst we recognise the complexity of the funding mechanisms, it is critical that any loan scheme for sub-18m blocks should be affordable and viable.

13. Does the EWS assessment cover general fire safety measures?

The EWS1 form assessment is to be carried out for valuation purposes only. It’s about the safety of different types of external wall systems used in residential buildings located across the United Kingdom and will determine whether or not remedial works are required, thereby affecting value. It is not designed to assess other fire safety features or risks and should never be used to determine the overall risk of fire to a building. It is not a life safety certificate.

The person responsible for the building (Responsible Person under the Regulatory Reform (Fire Safety) Order 2005) should have a fire risk assessment (FRA) for the building as this is an independent legal requirement that is already in place and does not commonly incorporate assessment of external wall materials. Note this will change with the Fire Safety Bill coming into force in England and FRAs will then need to cover the external cladding.

14. Does a nil valuation mean a flat is worthless?

No. ‘Nil valuations’ are used in the process of valuing a property for mortgage lending purposes, where a valuer is unable to provide a value at that moment in time i.e. when the valuers’ inspection takes place due to insufficient information being available. Often a nil valuation signals that the lender requires further information before a valuation can be made, rather than a property being unsellable.

15. Why are lenders asking for EWS1 forms below 18m?

Changes in Government advice in January 2020, bringing all residential buildings into scope, mean some residential buildings below 18m may now require an EWS1 form. For buildings of five or six storeys, there could be a significant amount of cladding on the building, or a check could be due to the types of panels on the building. For buildings of four storeys or fewer, there may be present the most dangerous types of cladding present. The guidance note for Valuers provides information on criteria where an EWS1 should be required.

A valuer should always have a rationale to justify the request for the EWS1 form.

16. Is the EWS1 form stopping homeowners from selling their flats?

EWS1 form assessments are not the cause of people finding themselves unable to move. In fact, they are helping to keep the home buying and selling market from stalling in exceptional circumstances.

Following Grenfell it became apparent, despite having building regulation certification, buildings may have safety concerns. This halted the market in some areas largely over concerns about the extent of future costs of remedial works, and where they would fall. The EWS1 form review process was introduced jointly by RICS and the two key UK mortgage lending bodies, to inform buyers, owners, lenders and valuers on the extent of works needed on the highest risk properties.

However, since the introduction of the EWS1 form, MHCLG advice to check a wall system has extended beyond the original scope, increasing the number of buildings needing checks.

Some of the issues arising from this change have now been addressed and eased following the latest RICS guidance, which clarifies where EWS1 forms are needed. Given the relatively small pool of fire engineers that are competent and have sufficient insurance to allow them to undertake these reviews, delays are unfortunately occurring in some cases (See Q16 for more on the RICS training course). However, the latest guidance should result in fewer EWS1 form requests which will enable the fire engineers to focus on the high-risk buildings. Ultimately, the EWS1 form process provides much-needed clarity around where works are required, avoids financial loss and helps to keep people safe.

17. In the RICS guidance note published on 8 March, it states the following on page 8:

“For buildings of five or six storeys, an EWS1 form should be required where:

  • There is a significant amount of cladding on the building (for the purpose of this guidance, approximately one quarter of the whole elevation estimated from what is visible standing at ground level is a significant amount).”

Whilst in Appendix B: EWS1 form decision tree, it states in Step 5 “Does the cladding cover more than a quarter of the full elevations of the building (including windows and doors as estimated from what is visible standing at ground level) OR is there any other reason it should be regarded as a significant amount?

What about in circumstances where a building may only have cladding that is less than 25% of the whole building, but that cladding is significant in terms of being greater than 25% of one elevation or concentrated around an exit point?

Is the intention of the guidance note that this reference to a ‘significant amount’ is in relation to just a single façade or the whole building?

Our intention is that cladding that is on one quarter of all of the visible elevations, standing at ground level, equivalent to approximately one quarter of the whole building, is normally a significant amount.

For example, in considering whether there is a significant amount of cladding on a building, cladding that links multiple floors of a building or is around the main route of escape is likely to require remediation

As stated in the guidance, these criteria are guidance and professional judgement will need to be applied.

 

RICS Training to increase the number of professionals available to carry out EWS1 checks

18. How many more qualified chartered professionals will this course provide?

RICS has secured government funding to train up to 2,000 professionals within six months. Since its launch in late January 2021, the response has been very positive and we have enrolled professionals in the RICS EWS Assessment training programme. There are currently around 500 professionals progressing through the training.

There are a number of factors that will help drive this number including the solution for accessing professional indemnity insurance (PII) that is being developed by the Government and key industry stakeholders.

19. Will you be able to train all these professionals without professional indemnity insurance (PII)?

The training will continue to progress, so yes RICS can continue to train them, it would be completing the forms post training that would be affected by PII. PII is an essential consumer protection mechanism.

However, the Government have recently committed to developing a Government backed indemnity scheme for professionals completing EWS assessments.

The scheme will be open to professionals who successfully complete the RICS’ External Wall System Assessment training. Building on our efforts so far to help develop the indemnity scheme, we will continue to work closely with all parties to ensure that the Government deliver an appropriate and affordable scheme.

Information taken from the RICS website.

Seven simple things you can do to protect your house during the pandemic

As the coronavirus pandemic continues across the country, people are undertaking new measures to make sure they’re safe. From washing their hands for 20 seconds at a time to social distancing, the public have become accustomed to the new measures.

Here’s the full list of things you should be doing to protect your home:

1. Safe shopping

Shopping for essentials is one of the only reasons people can leave their home for. While you may be taking every care while your in the supermarket there could be hidden dangers when you get back home. To make sure you’re not inadvertently bringing the deadly bug into your home on packets you are advised to remove as much of the outer packaging as possible. So empty packets of pasta into containers and remove the cardboard box from your cereal. For anything that can’t be taken out of its outer packaging, like beans, tinned soup, or tinned vegetables, wash the cans down with soapy water.

Current guidance tells us that the food itself is unlikely to be a risk, because even if virus particles are ingested, they probably would not survive in our stomach acid.

2. Living with other people

Coronavirus can strike anyone – including people in your own home, which can present problems.

Anyone who is displaying symptoms of Covid-19 has been told they must self-isolate for ten days to prevent protecting anyone else. But how should the people they’re living with cope with someone who should have no contact with others. Breaking the home down into groups – the isolaters, who have symptoms, the distancers, who are also living in the same home but have no symptoms and the shielders, who are particularly vulnerable to coronavirus, such as the elderly. The shielders should be given their own room if possible to reduce the risk of them coming into contact with the virus. But where this is not possible you can draw up a rota so people know when they can and can’t use communal spaces. Shielders should then be able to use these rooms first, such as the kitchen, before they become possibly contaminated. Then the distancer can bring the isolater food from the kitchen to prevent extra risk to the shielder.

3. How to clean effectively

There are entire aisles devoted to cleaning products in the supermarket, with people stripping shelves bare when it became apparent how serious the pandemic really was. You only really need bleach and soap and you don’t have to spend big to make sure you’re keeping your home clean. A correctly diluted bleach solution (cheapest bleach you can get in the supermarket will work 100% effectively against the virus), or soap and water. To make sure you’re taking every precaution always wear gloves when cleaning and use bleach in a well-ventilated area.

However, if you still can’t get hold of bleach, don’t panic – soap and water is really effective too.

4. Forgotten things you need to clean

We all know our main living spaces should be as clean as possible, especially at the moment, but there are several other things inside our homes that we all forget about. While you may be frantically scrubbing your home, there are some areas you may neglect which could be a breeding ground for bacteria. The outside of cleaning product bottles, soap and hand cream bottles as they are items that we frequently touch and could transfer coronavirus on to. The simplest way to clean them is by washing them in warm soapy water.

5. Stop coronavirus getting in

While most of us are taking social distancing seriously and following the government guidelines to the letter there are still times when we have to leave home. Shopping for essentials and heading out for a walk or run once a day are allowed so people need to take extra precautions to make sure they’re not bringing coronavirus back in with them. The first thing people need to do when they walk through their front door is take their shoes off as coronavirus could live on the soles for up to five days and on clothes for 24 hours. Shoes should be kept in the hall or if you don’t have one, keep them in the same place every day. Next, if you’ve travelled on public transport or been close to other people, also take your clothes off immediately and throw them straight in the washing machine.

6. Be safe when ordering a takeaway

Treats are important to keep us all sane during the lockdown and there are many takeaways still delivering to give families a boost. Ordering food may also be vital for some people after supermarket shelves were stripped bare as people stockpiled in panic. And while it is small, there is still risk involved with ordering food from outside. When getting your takeaway simply remove outer packaging and get rid of it. For those takeaways without easily discarded packaging, either wipe down with a bit of soap and water or decant its contents into a clean container/plate.

7. Drying your hands

After weeks of being told to wash our hands for 20 seconds as regularly as possible – singing Happy Birthday twice means you can get the timing right – we’re all experts. But when it comes to drying our hands afterwards, don’t make the mistake of using a dirty towel.

The three big priorities renters are looking for in 2021

As we continue with imposed regional restrictions in 2021, we are reminded of how it began and what it has taught us all so far.

The March lockdown caught many people off-guard and the world was forced to adapt quicker than they had ever expected. The letting market is no different. Tenant priorities have changed, as they look for new features within their tenancies and their properties.

Bigger spaces

Lockdown restrictions and social distancing guidelines throughout the year have forced people to assess their living situations. As more people are working remotely, the demand for extra working spaces has risen. This has been evident in larger cities where extra space, whether indoors or outdoors, can come at a premium. The rise of the home office has pushed tenants to look elsewhere to properties that can match that demand and give them that extra space.

A noticeable trend is the growth in appetite for properties outside of the capital and large cities in the UK. Not needing to be in such close proximity to the office has allowed prospective tenants to widen their radius. Pre-COVID, the thought of living in a city centre high-rise apartment complex wouldn’t come with too many challenges.

Now however, the isolation factor may still linger even with recent news of a potential upcoming vaccine. Time will tell when, and if, normality significantly returns, but people won’t forget. The idea of living in a different type of property, in a different area and possibly nearer family is becoming more popular.

Longer tenancies

The desire for tenants to stay in larger properties for longer has accelerated during 2020. Properties with more indoor and outdoor space have taken precedence over city-centre flats in close proximity to the office. This has ultimately increased the average tenancy length across the board.

Recent data from, Zoopla, indicates that tenant demand in rental property continues to rise. On average, demand from tenants in the private rental sector in September rose by 20% compared to the previous year. This increase has pushed prospective tenants to look for longer rental periods.

While the housing market remains open, remote and virtual management is highly encouraged. IPM are already at the forefront of technology by using their app to help manage, assess and communicate with tenants.

More flexibility

While 2020 has forced many people to adapt, it has also encouraged them to be flexible. More people are looking to try new areas, new properties and new ways of living before they commit to a purchase. This has been the case even pre-COVID.

However, what we are seeing now is more people trying new areas and properties that they otherwise would not have considered. For example, the growth in demand from London-based individuals for properties outside of the capital attests to this.

By renting, tenants can analyse the short to medium-term with an eye on the long-term. What they value now, or previously, might have changed. Tenants can see how the economy responds and whether a vaccine will return us to a more normal working/living environment.

For many, living further away from work and working from home has encouraged a better work/life balance. This trend is showing no signs of slowing down. Therefore, it is becoming clearer how significant the rental sector is for the future of the housing market.

Flexibility doesn’t just mean in terms of how people want to live, but the way the live with the increased rise in pet ownership. Many tenants are looking for flexibility in their leases to allow pets and designated exercise areas within their developments.

There are lots to think about in 2021 but the biggest factor is how we all adapt to these new changes.

 

IPM announce new director appointment

IPM ANNOUNCE NEW DIRECTOR APPOINTMENT

IPM is expanding the board of directors further with the appointment of Chris Peters as a new director of Inspired Property Management effective from the 1st December 2020. The appointment will expand the board of directors from four to five independent directors, bringing valuable experience and insight to the board. This appointment will enable the board of directors to enhance its commercial experience and operational insight, particularly within property industry.

Chris has worked within the property sector for over 10 years’ specialising in leasehold management and is a qualified member of the Institute of Residential Property Managers. Bringing a wealth of experience and a proven track record as a pivotal member of the management team, Chris has worked within some of the largest property management companies across the UK.

 

Chris Peters, director at Inspired Property Management, said: “It was an exciting new chapter to hear the board of Inspired Property Management had invited me to join their dynamic and growing company as a member of the board of Directors. It will be a great honour to work alongside Andrew, David, Danielle and Sarah in being part of an evolving team providing strategy and direction to an expanding and modern company.”

“The focus Inspired Property Management has on providing bespoke and tailored management solutions to their clients and customers, made accepting the offer to join the board of Directors an easy one to make. I am excited to help the company continue to grow in what is an ever changing and challenging environment for the property industry”

 

Danielle Parker, director at Inspired Property Management, commented: “I am delighted to have Chris join us at this important and exciting time. The appointment comes as we embark on an exciting time of expansion and we believe his input will be key in enhancing our service delivery to both clients and leaseholders.”

“As we prepare to navigate our way out of the challenges caused by Covid-19, our first-class leasehold property team, headed by Chris, whose experience and expertise is second to none, will steer us in the right direction. We’re confident about the future and our commitment to growth.”

 

IPM continues to go from strength-to-strength after making a number of strategic new hires and investing in technology within their business to allow for growth and development and become a more client focussed organisation.

 

Who is responsible?

Who is responsible for things like lights, lifts, lawned areas?

When it comes to the practicalities of looking after lifts, lighting and lawns within blocks of flats and apartments, whose responsibility is it to maintain them?

The best place to begin is your lease as this will have all the details about who is managing what aspect of your building and communal areas.

Your Lease

Your Lease should be the first document you turn to and is vital when it comes to owning your flat through a leasehold. This document will give you an overview of your responsibilities and what conditions you’ve agreed to. Examples of what your responsibilities are include:

  • if you require permission to make alterations
  • how much you’ll have to pay in maintain charges to maintain your property
  • whether you or your landlord has responsibility for repairs and dealing with noisy neighbours

As you will know (or hopefully know!) if you have bought a flat (and that could be a house broken up into flats or a purpose built block of flats, etc), then normally the leasehold you own relates to everything within the 4 walls of your flat.

This obvious leaves out the communal areas which will need to be maintained and this is usually undertaken by a property management company.

The freeholder usually appoints a company of professional managing agents who look after the overall maintenance. That’s where the fees for the maintenance come into play.

It’s well worth reminding yourself what SERVICE CHARGES and GROUND RENTS are and what you are paying for, and that includes knowing who’s in charge of repairs to internal communal areas. We will write about Service Charges and Major Works in this article only.

Service Charges

Have a look back over your lease as it will set out the way your service charges are organised and what can (or can’t) be charged. Most flat owners will pay a service charge, and if that’s you, you have the right to:

  • ask for a summary showing how the charge is worked out and what it’s spent on
  • see any paperwork supporting the summary, such as receipts

Your landlord must give you access to this information – it can be an offence if they don’t. Get to know the property managing agents and what their roles are. Most flat owners will have lights, lifts, gates and other communal services that need to be maintained, not just for aesthetics or convenience, but for safety too. Sometimes these items require additional repairs (outside the normal services charges).

Buildings insurance is normally covered by the service charges (you should stay on top of Contents Insurance) so again, check your lease and make sure you know what’s covered should something happen that requires insurers to cover a problem.

Generally speaking, the lease asks the leaseholder to be held responsible for looking after the part of the building they lease, such as:

  • internal plumbing
  • wiring
  • plasterwork and floorboards
  • the paintwork and decoration of their flat
  • any carpets
  • furniture and appliances

Major Works

Some major repairs may need to be paid in addition to services charges. Major works are usually the responsibility of the landlord.

Q. What funds do they come out of?

A. A reserve fund (or “sinking fund”) if available.

Leaseholders may pay into a sinking fund or reserve fund over a number of years. Leasehold law comes under the Landlord and Tenant Act 1985 so the term “major works” (sometimes known as “qualifying works”) is a term used under this Act. Alternatively, demands for the works may be sent out to leaseholders.

Q. How much do they cost?

A. If the costs of major works are going to be in excess of £250 for any one leaseholder, then the landlord is required to consult with leaseholders under Section 20.

Q. What is a Section 20?

A. There are three main notices that must be served on the leaseholders under a Section 20:

1. Notice of intention: This Notice must describe the proposed works, why the works are being considered and offer an invite to the leaseholders to make written observations within 30 days.

2. Notification of estimates: When the 30 day consultation period expires, it’s time for at least 2 estimates to be obtained by the landlord from contractors to carry out the works.

The landlord must provide to the leaseholder a Statement of Estimates setting out details of quotes obtained together with a summary of observations (received within the consultation period). The leaseholders are then invited to make observations (in writing) of those estimates within 30 days.

TIP: If this ever comes up, speak to a leasehold property lawyer to get more help, and look through Flat Living for more updates and tips on Major Works and what qualifies for the same.

3. Notification of award of contract: If you are not a legal professional or heavily into property law, this can all seem a little daunting and complicated. Essentially, this third part includes the why and what from contractors’ estimates and the leaseholders must be kept informed. Ultimately it’s a notification for you (as a leaseholder) as to why the landlord chose the contractor for the repair the major works. There are many variables to consider when gaining estimates from contractors, and sometimes the cheapest isn’t the best one.

You only have to pay into a sinking fund if your lease says you have to.

When we mention MAJOR WORKS, in property law and in leasehold terms, it means works that are required to maintain the building or premises, at an extra cost by the tenant under the terms of the lease through a “top service charge”.

If you are thinking of buying a flat it is SO important to get really good legal advice or the best leasehold lawyers on it, because there may be some works due, or the building, lift, gate or lighting may be particularly old or in need of some major TLC!

Conclusion

The law dictates that leaseholders paying variable service charges must be consulted before a landlord carries out qualifying works or enters into a long-term agreement for the provision of services.

When you are buying your flat (congratulations!) as a leaseholder, speak to your solicitor or instruct a solicitor of your choice that is recommended to you.

As a leaseholder, there are many aspects of a lease and it’s really worth understanding your requirements before signing on the dotted line. If the stairs, gates, lifts, lighting and other communal working parts, look like they are old, out of date or might be an expensive addition to the usual services to repair, speaking to a specialist lawyer will guide you with the best advice going forward.

Credit goes to LMP Law, for the overview of who is responsible.