Matchmade

EPCs are not fit for purpose: how is anyone supposed to make judgements about the cost-benefits of major investments like solar panels, ASHPs or external wall insulation when the final document that assesses their value is such a tick-box document based on a 20-30 minute "survey"? The points system is also utterly stupid - it's not even based on a house's carbon costs and privileges gas over electricity, which is why many people find that when they install an air source heat pump, their EPC rating actually gets worse.... Read More

I put "bills inclusive" on my houseshare adverts, but explain this means that £150 of their monthly payment goes towards their share of the bills, with a top-up payment required if the average over 3 months exceeds £150, and a refund given if it is less than £150.

Either way, there is no way in a million years I am *really* including uncapped bill payments in the rent. It virtually guarantees wasteful and excess energy use. If you seek to control this by using times and restricting the house temperature to 19 degrees, you then have a load of complaints.

Tenants need to learn that they must budget their energy use just as they are meant to be grown up enough to budget the rest of their lives.... Read More

If you have the money to buy, it sounds like a no-brainer to me: it's not the omly solution, but you'll have control and the freedom to upgrade the flats and fix the problems as you wish, then decide if you want to continue letting or sell the improved flats. Either way you should make money courtesy of these third parties who are evading their responsibilities.

Lease extensions and freehold purchases have pretty predictable prices; ask a few surveyors with experience in such matters... Read More

Hello Peter,

I can't really comment without a floorplan, some photos, and some idea of which way the floor joists run. Assuming you are just remodelling the internal space and not changing the curtilage of the building, there shouldn't be any need to get Planning involved. However, what is going to be done with the space created downstairs by the removal of the staircase? It's unclear whom that will belong to, or how this project will affect your neighbour downstairs.

You really need to get a builder in to look at the practicalities and how you would access and use the space. You also need to ask about issues like Party Wall Agreements with your neighbours downstairs, if the removal of the staircase affects them, and Building Regulations as regards ensuring the new floor area is safely supported and insulated. There's likely to be structural work involved in creating a new floor, simply to hold it up: I doubt new joists can simply be added to the existing ones and cantilivered over the void that will be created by removing the staircase.

Regards

Tony... Read More

This is a specialist area, so I would consult a solicitor who has expertise in freeholds. I suspect you will have to offer the leaseholders an opportunity to buy the freeholds, as you are proposing a change of ownership from the company to you personally (it's not entirely clear but I think you are saying that the freeholders are held in the name of the company).

But the leaseholders already have the right to buy out the freeholder anyway, don't they, which they haven't taken up, so what's the problem?... Read More

See discussion at http://www.property118.com/i-am-a-property-developer-ask-me-anything/44690/comment-page-19/#comments, which contains a link to an earlier discussion by Mark Alexander.

When you find a buyer, why not rent the house to them until the six months are up, then they will be free to submit a formal application for a mortgage? They should be able to get an Agreement in Principle beforehand, which will confirm to you that they can afford to buy.... Read More

I agree with Romain: you need to arrange a Deed of Assignment, in which the new tenant agrees to take over the departing tenant's responsibilities in the existing tenancy agreement. All the other tenants and the landlord must agree and sign too.

The NLA has a standard form for this; the RLA probably does too.

The deposit is a complicating factor. If the deposits are meant to be repaid to the Lead Tenant and she isn't moving out, that should be fine: when I did this, I just took an identical share of the deposit off the new tenant and "repaid" the old tenant his share (duly documented and the Lead Tenant was aware), and the new tenant was reimbursed by the Lead Tenant at the end of the contract. However if the Lead Tenant is the one moving out, I suspect you will have to contact your deposit company and ask what to do. There must be a common sense solution but the system really wasn't designed to deal with the needs of HMOs (which this house appears to be).

As regards the inventory, to save everyone the cost of having a new one done, I asked the new tenant to check the house with reference to the existing inventory and note any changes; these were agreed with the existing tenants and a settlement made, effectively resetting the house to a new starting point with signed amendments.... Read More

A new EICR and PAT every time a landlord buys a toaster or a microwave? Easy-peasy work for electricians, and what a ludicrous waste of time and cash for the landlord: £10 to buy a new toaster, and what, £80 for an EICR and PAT test? Or am I misunderstanding something here?

Why are these requirements made only of rented property, but not of owner-occupied? Surely if the rationale is one of safety, it should be required of all householders.

I take it these regulations only apply for *new* equipment purchased new or second-hand and installed after 1 December 2015, and not existing equipment?... Read More

I rent out some HMOs to graduate sharers, and only increase rents during a tenancy if it's become a particularly long one and the rent is clearly out of line with what the other tenants are paying. I do this to keep my tenants happy and inclined to stay, which reduces the pain of having to keep finding new tenants if you keep increasing the rent.

Of course this undercharging of rents is never reported in the media: all they do is focus on the statistics based on the very small proportion of rental properties that are currently being advertised as available. The statistics about "average rents" are clearly out of line with what landlords are actually charging, because of the "drag" effect caused by many landlords not raising rents during a tenancy.... Read More

I would ask your grandfather to act as your mentor for the first year or two while you find your feet. You could have regular meetings at the house, perhaps with your mother too, to go over what has happened and what you've learnt, and to review the accounts. That way you get to benefit from his experience and he gets to check everything is OK, never mind just enjoying each other's company.

I don't understand why your grandfather needs to sell the house to her at £10K below market value. Is it to save himself CGT? But as Ross says, this only exposes you to increased CGT and even IHT issues later on. If it's a question of the size of the mortgage, could he not loan or gift you and your mother the extra deposit needed?

Your mother can't just sign the mortgage over to you: the mortgage company will want to assess your income, which must typically be a minimum of £25K, confirm that the rent covers the mortgage interest, and put you on their current rates, so effectively it would be like a new mortgage.

Have you looked at taking out a BTL mortgage in your own name instead, with your mother and/or grandfather acting as guarantor. This would be much simpler in terms of ownership and taxation. I know this is possible for regular mortgages, but not sure about BTL and whether there are any age restrictions - ask a broker.... Read More

Penelope - wow, 30 people, well done! If you can, I would suggest you brief the sales agent beforehand about the arrangements for leasehold, freehold and management, as people are bound to ask.

Also, do your own research to supplement what your agent tells you. Look at what your competitors are doing in other local flatted developments, Visit them and pretend to be an interested buyer. What's their marketing like compared to yours? How much are they charging in ground rent? What will the management fees be, and how are they controlled? Allowing the leaseholders to run their own management company at your flats is likely to be a bonus compared to the arrangements at larger developments, so emphasise that and resist pressure to give up the freehold - it's a valuable asset.... Read More

The fee is of course outrageous and could be challenged: competitive quotes should ideally be obtained from a number of surveyors (offer to administer this yourself, to avoid being charged for the agents' time), and details provided of how Knight Frank reached the figure for their fees.

However, in my experience, if you challenge these people, they will dig in their heels and hide behind "procedure". I suggest instead that you be terribly nice to them, say you want to be cooperative and minimise their workload, and offer to find and employ a surveyor yourself to write an independent report.

It is not rocket science to inspect a wooden floor and its underlay, and assess any risks and the potential noise impact on the people below you, but I'm afraid you appear to have broken the rules, so unless you can negotiate a method of resolving this, Knight Frank and the surveyor will see this as an opportunity to make some easy money, all dressed up with the usual "professional" flannel.

Also check the terms of your leasehold agreement and your management company Articles of Association, to see on what basis Knight Frank were appointed and where their fees were specified.

I'm afraid if you replaced the wooden floor with carpet at this late stage, they will still insist on an inspection, never mind how many photos and invoices you provide.... Read More

A simple manual barrier (two posts and a cross pole or swing gate) might be sufficient, if warning letters don't work. An online search for "manual parking barrier" throws up a lot of hits. Some of the options seem to come with coded locks, so the leaseholders can get in and out.

Alternatively, since there is clearly demand for parking space, why not go with the flow and charge these people for parking during the day, if the leaseholders agree? This will help pay for the cost of a barrier, and then provide a small ongoing profit for the leaseholders. Parklet.co.uk and www.justpark.com might be useful for model rental agreements.... Read More

Check your leasehold agreement and the terms of your management company's Articles of Association. However these normally regulate the behaviour of leaseholders between themselves, not the freeholder, so you may have no luck.

Local residents are not normally entitled to compensation for noise, disruption and so on: redevelopment goes on all the time, so to dole out compensation to everyone who complains about the slightest noise or disruption would be ruinously expensive and complex to administer and adjudicate. There should however be controls on the hours of operation specified in the conditions of the planning permission.

My advice would be to avoid confrontation if possible and negotiate a settlement and a route of communication at an early stage. The freeholder or builder will probably want to keep you happy, just so she has one less thing to worry about during construction, so hopefully you can all work out some compromises. It would be diplomatic if you don't give the appearance of being largely interested in a cash payment, as there's a point where the developer will lose patience and dig in his heels, just as you would do if you felt he was riding roughshod over your concerns.

Check the Party Wall Act too, which probably protects leaseholders, and/or consult a solicitor with experience of the Party Wall Act in relation to leaseholders. The leaseholders should all - especially the top floor ones - be entitled to have a survey done of the condition of their properties before the work begins, and any damage beyond very basic hairline cracks in the plaster will have to be assessed by an independent surveyor and perhaps rectified by the freeholder. The extra weight of the new structure, plus impact damage from power tools etc, could have a significant effect on the existing structure, so you need to establish a baseline before construction begins.... Read More

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Hello Penelope,

Check with your solicitor, or ask her to ask a colleague if she hasn't much experience with leaseholds, but I would say:

1. You could retain the freehold for yourself, over a 125 year lease, and charge the leaseholders ground rent, typically £250 a year, index-linked to RPI and increased every 10 years. The ground rent could be more in London or if you are feeling ambitious. Without wishing to sound gloomy, that's an income of £750 a year which would cost you £25,000 in hard cash at 3% if you bought an index-linked annuity. It could come in handy in your retirement and for your beneficiaries or a charity after you pass away. Of course there is some administration involved with claiming ground rent but it's pretty minimal.

2. If you do give a share of the freehold to each leaseholder, make sure this is clear to potential purchasers and you could use it as justification for holding firm on your selling price. Leaseholders will naturally want to get a share of the freeholder for free, but the ground rent is a real asset and there's no need to give this up lightly.

3. Note the leaseholders are nowadays allowed to buy the freehold off you at some point if they choose, but a fair price must be paid to reflect the ongoing value of the ground rent to you. You will also be approached by companies offering to buy your freehold, usually for a pittance, so ignore them. Their business models rely on freeholders going for the easy lump sum, even though this typically only represents about 25 years of the 125 years of potential value.

4. A management company is needed to maintain and pay the utility bills for the common areas of the property on behalf of the leaseholders. Some of these management companies on old leased properties have a terrible reputation for over-charging leaseholders, so when I sold a block of four new flats, I felt it was fairest if the management company was owned by the leaseholders and run by them; their status as leaseholders guaranteed them voting membership and shareholder status in the company. They could of course outsource the maintenance work to someone else, but at least they would retain control and full visibility on costs.

Giving them control of the management company and hence their running costs will go a long way towards easing most people's concern over buying a leasehold flat, which will help your sales. I did my leaseholders a favour and set up and ran the management company for the first year, just while they found their feet.

You do not need to set the level of service charge after, say, the first year: that is for the leaseholders to agree amongst themselves. As freeholder though you should have it written into the terms of association of the company that you have the right to inspect the books and check they are managing things properly, taking out insurance, and hopefully setting money aside for replacing the roof one day. Your solicitor will advise on the exact wording, but you need to make sure that you as freeholder have the power to force the leaseholders to maintain the property if they are failing to do this. This can happen if a leaseholder refuses to cooperate, moves abroad, claims to have insufficient funds, and so on, or the leaseholders fail to communicate. It's surprising how a building and its grounds can fall into neglect if no-one is looking after it properly.

Let me know what you decide to do - I'm sure Property118 members will be interested.... Read More

If you need to replace the doors or doing a major redecoration anyway, why not?

There may be certain rules set by your council about fire doors and other fire protection measures if you are intending to let the house as a houseshare/HMO (more than five tenants and more than two storeys). I'd check with your local council about licensing requirements for houseshares.

Fire doors, especially if they have intumescent strips and self-closers, can change the feel of the house and make it feel more like an institution. Students quickly tire of the sound they make and the constant banging of doors when the self-closers are set poorly, so they prop self-closing doors open with fire extinguishers and the like, rather defeating the point of the exercise. Illuminated fire signs also to my mind make a house feel like a set of bedsits or a hotel, so I would avoid these if they are not a requirement.

Fitting inter-linked smoke and radiant flame alarms (in the kitchen) is not a cheap job, when you factor in the disruption to tenants and all the redecoration, and it can lead to endless hassles because modern sensors are so sensitive and will go off at the slightest whiff of burnt toast. This leads the tenants to turning off the smoke alarm circuit at the mains and removing the backup batteries from the sensors, which again rather defeats the point of the exercise.... Read More

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Insurance companies are a law unto themselves; you really need to check with criteria each firm uses to calculate rebuild values, and stick to that. There's no point in thinking you know better than them, as they are always looking for reasons to avoid paying out.

You don't say what your base figure for the rebuild cost was obtained, pre-2010. All I do is use the gross external area quoted by the building surveyor when I had each property first valued for mortgage purposes. I also cross-check this base value against my own measurements of the GEA, as instructed by BCIS. I have thought about further checking the BCIS rebuild figures against Homebuilding and Renovation's online calculator at www.homebuilding.co.uk/calculator, but I suspect that if the latter proved cheaper, an insurance company would say you must use BCIS, primitive though it is.

Would you post this query on the general Property118 board too, as I know there are insurance brokers who use this site, and they may have better advice than I can offer?... Read More

Sorry Penelope, I've not encountered this. A Google search on "mortgagee non-invalidation clause" threw up these two interesting hits which summarise the situation: see http://www.bakertilly.co.uk/publications/demanding-insurance-requirements-from-lenders.aspx and http://www.inhouselawyer.co.uk/index.php/insurance/7488-insurance-is-a-valuable-asset.

Your insurer is effectively being asked to provide two insurance polices: one for you and another for the lender, in case the lender's interests are prejudiced by you failing to disclose something that invalidates your insurance, or by your negligent action which cause the insurer to dispute your claim. Your lender wants to be actively protected as an equal interested party in the event of a claim, not be simply your debtor who is then severely impacted if you make a mistake and have your insurance claim refused, leaving you unable to repay your debt.

This has been going on since 2012 according to Baker Tilly: do you need to try another broker, perhaps with more experience of finance insurance for developers working on unoccupied buildings?

You could try posting your query on the general Property118 board, as your problem may have ramifications for landlords generally who are having substantial development work done on their empty buildings. There are also contributing members with greater experience of the insurance industry than I have.

You might also like to contact a developer like Nicole Bremner at Property Tribes (http://www.propertytribes.com/member.php?action=profile&uid=12854). She appears to be constantly tearing up old London buildings and converting them into flats, using development finance, so she must have encountered this sort of issue and have an appropriately-skilled insurance broker.... Read More