Watch out, rogue agents!

he Government will crack down on gazumping with new measures to professionalise the estate agency industry and make the process of buying property easier for consumers.

It announced a raft of changes to overhaul the largely unregulated sector, which has long suffered from being seen as anti-consumer.

They include encouraging the use of voluntary reservation agreements, in order to stop sales from falling through, ending the practice of gazumping, where sellers accept higher offers following an agreement to sell.

The Government also plans to get rid of ‘rogue agents’ by ensuring that all estate agents have a professional qualification. It will also make it a requirement for these companies to be transparent about whether they receive fees for referring clients to mortgage brokers, surveyors or solicitors.

Housing Secretary Sajid Javid said: “Buying a home is one of the biggest and most important purchases someone will make in their life. But for far too long buyers and sellers have been trapped in a stressful system full of delays and uncertainty. So we’re going to put the consumers back in the driving seat.”

Research carried out by the Government found that more than 6 in 10 people who bought or sold property have experienced stress due to delays in the property transaction process.

The measures come from a consultation held last year. More extreme proposals, such as creating financial penalties for buyers who pull out of purchases and cause chains to collapse, are not included in the new plans.

Some agents choose to be members of bodies such as the the National Association of Estate Agents or The Property Ombudsman. However, these organisations lack power, and there are currently no requirements for estate agents to have a formal training or certification, unlike in the United States. It is unclear what kind of qualification the Government will mandate, and it will hold another consultation to work out how estate agents can be brought up to standard like conveyancers, solicitors and surveyors.

Russell Quirk, chief executive of online estate agency Emoov, said: “This is really great news. The industry and Government have talked to a long time to clean up house buying. If you add both speed and certainty to the process, there will be fewer transactions falling through, less wasted money, and less stress for the consumer.”

He added: “For far too long it has got away with being almost entirely unregulated. How can it be that financial advisers dealing with the loan for the property are vetted, but the people dealing with the asset itself and the trauma of a protracted process are not overseen or licensed?”

A brief history of housing in England and Wales

The historical recognition of the form of houses tends to be identified by reference to a period of English architectural style, for example Tudor or Victorian. The majority of the current housing stock dates from the middle of the nineteenth century and later, although there are earlier houses in existence, such as sixteenth century (Tudor), seventeenth century (Stuart, Carolingian, William and Mary), eighteenth century (Queen Ann, Georgian) and early nineteenth century (Regency). Nearly all of the extant houses of the sixteenth, seventeenth, eighteenth and early nineteenth centuries are houses that were built for the so-called middle class (e.g. merchants and professionals) and upper class. Only rare examples of cheaper housing from these periods still exist.

The mid- and late nineteenth century (Victorian) saw a huge boom in the construction of housing in response to the mass movement of people from the countryside into the cities as a result of the Industrial Revolution. Cheap terraced houses for the workers, more spacious semi-detached houses for the managers and detached villas for the owners were developed in vast numbers on the outskirts of older towns, often by speculative builders, sometimes by the well-off themselves. These houses had solid walls of brickwork and/or stone, sometimes finished with render, roofs of clay tiles or slates, brick or timber-framed internal partitions, gas lighting, rudimentary cooking, washing and lavatory facilities and coal fires for heating. Much of the cheapest housing was of poor quality, using, for example, sun-baked bricks, and has subsequently been demolished. However, large numbers of terraced, semi-detached and detached Victorian houses are still in existence, albeit modernised at various times during the intervening period.

Houses built in the first decade of the twentieth century (the Edwardian period) are considered by many experts to be the pinnacle of quality in terms of workmanship and materials. Facilities are similar to those of the preceding century but of better quality. This period also saw the rise of the Garden City Movement, based on the writing of Sir Ebenezer Howard, who was highly critical of the urban development of the period and promoted the idea of a planned city with generous public spaces and buildings, low-density houses with large gardens in broad tree-lined streets and separate zones for factories and other industrial development. This led to the creation of garden city towns, such as Letchworth, Hampstead Garden Suburb and Welwyn.

The period between the First World War and the Second World War (the inter-war period) saw much greater state intervention in housing. Previously, involvement on the part of the state had been restricted to the provision of legislation encouraging local authorities to take action, but now the government legislated and provided the funding for the development of council housing, i.e. local authority social housing. There was also considerable private speculative housing development, leading to the suburban expansion of many cities. Both the council and the private housing of the period, particularly the former, reflected some of the principles of the Garden City Movement, especially the low-density housing, large gardens and broad tree-lined streets. This period saw cavity-wall construction and concrete foundations become standard. Floors and roofs were still constructed using cut timbers, bathroom and kitchen fittings were installed as standard, but were still very basic, hot water was often provided by a gas heater and space heating was again based on open fireplaces. Many rural houses still had no piped water, mains electricity or mains drainage.

During both World Wars housing development was suspended and after the Second World War little housing construction took place, apart from repairing bomb-damaged houses, until the mid-1950s when the post-war period of house building really commenced. Both council housing and private speculative development boomed for the next 20 years, although the standards were still relatively low, e.g. few new houses had central heating and roof insulation was non-existent until 1965, and then only minimal. However, most rural properties now had mains electricity and water, and mains drainage became more common.

Gradually, from the 1970s onwards, trussed roofs, often finished with concrete tiles, became standard and modern timber framed construction became relatively popular after a difficult introductory period; even where cavity construction continued to be used, timber or steel framed internal partitions were commonly installed. Central heating became the norm, and during the 1990s, cavity wall insulation and double glazing became standard in new housing developments. Dry wall finishes were also prevalent for new development. During the past 30 years or so, increasing use has been made of new materials and techniques. Examples include composite timber products for structural purposes and finishes and plasticised products, ranging from components such as windows to paint systems. There has also been recognition that many older and sometimes discarded, or unfashionable, products and materials are still relevant, e.g. clay roof tiles, roofing slates, lead work and lime mortar.

Adding property value from studies and cellars

One of the biggest changes that has occurred within the family home over the past 10 to 15 years is the growing popularity of the home office. An increasing number of people now choose to work at home, either to create a better work-life balance, to avoid the misery of commuting, or simply to undertake the work they love in the comfort of their own homes.

Britain has become an entrepreneurial state, with many ambitious individuals and small groups keen to set up companies on the lowest possible budget. It’s undoubtedly true that setting up at home cuts overheads significantly, and allows you to work long, productive hours without completely giving up family or home life. Just over 10 years ago, I remember leaving a large practice to start my own business from my spare bedroom. It was an enormous downscale –believe me! However, even though I now have a much larger, fully staffed office, I still like to spend time at home in my own study, in quiet contemplation. It can be an amazing place, allowing me to avoid the distractions of the outside world and focus on delivering work that needs high levels of concentration.

Whether you choose to use a corner of your living space, or create a study or home office in a designated room, it’s undoubtedly important to keep it tidy and make it ruthlessly efficient. But that doesn’t mean it can’t be beautiful. Seamless, integrated storage will keep chaos at bay, and you can focus on creating a comfortable, motivating place to work.

A study is a good place to have if you have to work from home. Another place that can add value is a cellar.
If you are lucky enough to have a small cellar underneath your house –perhaps used for nothing more than some storage or a place to keep some wine cool –you may be able to change this into much-needed, usable space.

One of the problems with existing cellars is that they have no natural light –and no natural ventilation. It is also common for cellars to have very restricted headroom.

If you are working to a tight budget then your best option is to waterproof the existing space as it is, paint and decorate it, install some decent artificial light and some mechanically extracted ventilation, and then use the space as a decent family utility room.

The great thing about putting washing machines and dryers in this sort of underground space is that the surrounding walls give a large amount of acoustic protection. It’s great to move all of these noisy appliances from the ground floor down to the cellar. If your budget can stretch a bit further, why not consider digging out the cellar’s ground slab, and building in a new, insulated concrete floor at a lower level, to give you some increased headroom. If you have a few more spare pennies stashed away, you can always look at enlarging the cellar and extending it underground –either towards the front or back of the property. This may provide you with the opportunity to install some glazing at ground level –to allow natural light into the basement spaces and encourage some good, old-fashioned natural ventilation. This makes your basement utility room a much nicer space in which to spend time –rather than being shut away in a dark and dingy dungeon.

The truth is that any additional space for utility-room storage, which can be easily accessed by a cellar staircase, is always going to be a great asset and a selling point for any good family home. Even with the tightest budget, any conversion of an existing cellar is going to be a good use of space.

The construction processes vary depending on the type of property that you live in, but the general principles of creating a new basement under an existing building go something like this:

1 The basement company constructs a hoarding at the front of your house, which allows them to start digging through your front garden.

2 Once they have dug down to the basement level, they then start to make their way underneath your house, by forming a one-meter-wide tunnel right down the middle of your home. They go down the middle because all of your structural foundations run along the edge of the house. For the time being, they have to stay away from them.

3 They then have a skip located on the road outside your house and a conveyor belt that goes from the underground space up through your front garden –over the top of the street footpath and into the skip on the road. As the guys dig out the mud, they throw it on to the conveyor belt and it goes from the subterranean space and into the skip. The skip is unloaded regularly by a lorry with a grabber.

4 They then tunnel off to the corners of the house and begin to underpin the house with huge, deep, new concrete foundations. They gradually and very slowly do this in sections to provide the much-needed structural support to your foundations before they can remove the surrounding soil.

5 They underpin, remove a bit of soil, then put up some Acrow props to provide some temporary support for your flooring above.

6 Once all of the perimeter walls and foundations are completely underpinned, the remainder of all the soil under your house is removed.

7 Steel beams and steel columns then span beneath your existing ground floor to keep it in place.

8 Light wells are formed at the front and the back of the property, to allow in as much natural light and ventilation as possible. These can either be sunken external courtyards or glass skylights inserted at ground level.

9 Next, the waterproof tanking system is put up against all of the concrete walls.

10 Insulated concrete slabs, under-floor heating pipes and screeds are installed.

11 All the drainage and plumbing is installed.

12 The walls are timber-batoned, dry-lined and plaster-boarded before being given their final finish.

A quick summary of what mediation entails

Mediation is a voluntary process in which the people involved in a dispute agree to sit down together with a neutral third party – the mediator – and discuss their mutual problem. They then work together, seeking a solution to the problem with which they can all live. Most often there are two people involved in a dispute, but there is no limit to the number that can be involved, or to who can attend a mediation to help resolve the dispute. While the mediator facilitates this process, the solutions that the people in the dispute come up with are entirely their own.

Mediation is voluntary because if someone absolutely does not want to attend a mediation, trying to force them to do so is unlikely to help in reaching resolution. You may have all kinds of misgivings about the party or parties with whom you are in dispute as you go into mediation, but essentially you must want to at least try to solve the problem. Mediation cannot work in any other way.

Generally, as the first step in the mediation process one party will contact the mediator expressing his or her desire to explore the options for mediation. If the dispute has reached a point where the parties are no longer in communication, most mediators are happy to speak to each person individually and confidentially, and to handle all contact in setting up the meeting between them if that facilitates the process. What the mediator cannot do is to force or coerce the other party to attend. All he or she can do is to talk to them and to explain the principles and processes of mediation, taking care to answer all their questions. Once the parties agree in principle to mediation, and before they’ve even sat down with the mediator, they are showing a willingness to resolve the dispute.

Mediation’s emphasis is on moving forward – not on looking back. Your dispute has got to where it is now and, however it got there, focusing on that part of the problem usually does not help anyone come to a resolution. Mediation’s purpose is to focus on the future and to progress on new terms with which everybody can live.

When you go to court, the focus is always on the past: who has been at fault, who has broken a contract, who has done something wrong, who has done what to whom. At the end of the court process a decision is handed down by the judge which attributes blame and prescribes a remedy. The court generally makes no attempt to give direction on how the parties should proceed in the future, and certainly does not want to involve itself in any ongoing supervisory role. This can be particularly difficult if the parties have to remain in any sort of relationship with each other such as in family cases or in cases involving relatives or work colleagues.

Mediation’s focus is on how to move forward and this is achieved by directing attention on how to solve the problem. It can also contain agreed terms for the future conduct of the relationship, if that is what the participants want.

Disputes in any context tend to generate a lot of bad feeling and high levels of stress. Have you ever been in a dispute with anyone? Most of us have. No matter how small the argument, feeling angry, unheard and misunderstood does not feel good, even if you are convinced that you are 100% in the right. Relationships of all kinds can be heavily damaged by dispute. The longer people remain in dispute with each other, the more they look for evidence to support their point of view in the argument and they therefore focus on the dispute. They fixate on this and focus all their energy on it to the extent that finding a workable and amicable solution that helps find a way out could not be further from their thoughts.

When people are in conflict, stress levels can rise sharply, and this is not healthy for anyone on either side of a dispute. Relationships outside the argument can also suffer when someone is very angry for such a very long time. When an amicable, acceptable resolution is reached, stress levels immediately drop and people feel much more positive and much lighter. A weight is lifted from their shoulders and the time and energy they once focused on the argument can now be used for things that are helpful and enjoyable to them.

Mediation is entirely confidential. This is another very important point and must be strictly observed by the mediator and by all parties to the dispute. Anything that is said or done in a mediation cannot be revealed to outside parties either during or after the mediation.

Mediation is also ‘without prejudice’. If your mediation is one of the few that is unsuccessful, and the decision is taken to proceed to court, whatever was said in the mediation may not be relied on in court by either party without the express permission of the party that made the statement. This means that if something new comes to light in an unsuccessful mediation, this information cannot be brought into the legal arena. Neither can the mediator be brought into the legal arena as a witness, save on the orders of a Judge.

The description of the mediation process as without prejudice means that anything said during the mediation cannot then be used as evidence in any legal proceedings which are being considered or already started. This allows parties to talk openly about options for agreement. Parties are able to suggest new and creative possibilities for agreement without jeopardising their chance to go (or to go back) to court if an agreement isn’t reached. A mutually agreeable outcome is often one which could not have been reached in court.

With the exception of family mediations, where some records must be kept, the mediator destroys all notes and information relating to the meeting apart from the agreements to mediate and the record of the attendees at the meeting. This further protects the confidentiality of all who attend as there is then no danger of any information falling into the wrong hands.

The voluntary and non-binding nature of mediation means that parties are not compelled to reach an agreement and options for an agreement can be discussed without binding themselves to a particular outcome. There is no consequence on the parties if they are unable to agree (other than financial loss where the mediation is self-funded). Mediated agreements are only binding if both parties wish them to be.

During a mediation, while the mediator assists and facilitates the process, the parties are responsible for generating options for agreement and the terms of any settlement reached. The mediator does not offer their opinion on the merits of either party’s case or seek to determine or impose any outcome. They do not make suggestions or recommend proposals for agreement (but may pass offers between the parties if requested to do so). Any agreement reached must be mutually acceptable to all parties and will have been created by them.

It is integral to the mediation process that parties are able to make informed choices, about what to propose by way of agreement and whether to reach a settlement. Mediators encourage parties to explore their positions so that any agreement reached can reflect their needs and interests. Mediators also encourage parties to consider the likely alternatives to reaching a mediated agreement to objectively assess any offer on the table. When a dispute involves legal rights and entitlements, parties should seek legal advice before commencing mediation. Parties may have a legal adviser present during the mediation (or available on the telephone), or be given the opportunity at the end of the mediation to consult a legal adviser before reaching a legally binding agreement.

Mediation invites parties to widen the potential options for agreement and explore new possibilities and ideas. Mediated settlements can be reached where direct negotiations have failed by getting the right people in the same room and breaking down barriers to communication. The time spent by a mediator encouraging parties to explore their own needs, as well as those of the other party, enables participants in mediation to make practical proposals. Such offers may have added-value as they may have huge significance to one party but can be provided with minimal inconvenience to the other. It may involve looking at previously unconsidered options and widening the options for agreement.

The Property Ombudsman offers free, impartial and independent service for the resolution of unresolved disputes between consumers and property agents. The scheme has been providing consumers and property agents with an alternative dispute resolution service for 27 years. A member agent signed up with The Property Ombudsman is obliged to adhere to a code of practice which consumers can take confidence from.

Factors influencing property development

Deciding to become a property developer as a vocation is an important decision that requires various considerations before you take the plunge.

Developing a property in poor condition as basis for a successful business venture which gives a sound return on investment requires a lot of energy, time, money and luck. How much energy, time and money are required multiplies with an increase in the scope and level of activities. If you move from developing a large, Victorian property to two properties, or more, the demands rise commensurately.

Using project management ideas to succeed – the feat of managing a project based development process, whether of a single Victorian house, a single larger scheme, an old warehouse conversion to provide dwelling units for 20 people, as in for example, a block of flats being adapted for Home in Multiple Occupation (HMO, each require the application of the same basic principles. Even when the challenge is that of working on two sites simultaneously, sites, which are next door to each other, you still need lots of energy. The point of note here is that, each of these scenarios will pose their own challenge.

For some, these challenges can sometimes prove so daunting, that developers with years of experience get into trouble, which is when, some take appropriate, corrective measures and the result can be survival from where they rebuild and live to tell the tale. Others may not be so lucky and go under. You have to keep your eye on the ball in relation to the factors which will help you to not only avoid going down but to move from one successful development project to another. This said I am reminded of the old Chinese saying which goes something like; the glory is not in not falling but in rising even higher after any fall.

When it comes to property investment, as with other times, location and unrealised, hidden values hold the key to success in this business. Furthermore, in a UK context, London and the south of England, are the ultimate magnet for property developers. This is an area consistently identified as offering ideal investment returns on account of; development opportunities, the high rents achievable and the considerable capital appreciation over time are all contributory factors. Demand and supply factors, which favour the developer’s side of the equation, have contributed in no small way to property price appreciation over the last three decades and more, with supply unable to match or catch up with demand in over three decades, especially since the 1990s.

Spreading London ripple effect – what is often referred to as the ‘London ripple effect’ in relation to high prices always sees the higher London price rises, spread to the surrounding regions and beyond. Such ripple effect is dependent on the prevailing economic climate of the time. Examples abound of out-of-London property hotspots like Birmingham, Manchester, Liverpool and Leeds to list a few.

Scotland and Wales Farmers’ diversification into the market for holiday accommodation – for a couple of decades now, it has been noticed that in locations far removed from the hustle and bustle of city life, for example in Scotland and Wales, areas which have not witnessed property price increases, like those found in the south of England, farmers have included diversification from core farming activities into providing accommodation for tourists. For the farmers who have taken advantage of the opportunities opened by tourism, refurbishing old barns and disused farm cottages has become an established strategic route to generating additional revenues. This has to be seen in the context of dwindling grants and subsidies, formerly built into the income streams of members of the farming communities. It is as much driven by political pressures and dwindling government support as by the survival exigencies of the day. You can be sure that where there is a development tag attached, you will soon find a property developer knocking on the door. Could that developer be you in the near future?

Scotland and the City of Aberdeen and surrounding districts – still on Scotland, there had, until recently, over several decades, been intense development activities in and around the city of Aberdeen. This relates to Aberdeen being at the centre of Scotland’s oil industry, with people coming to work in the industry or to study about different aspects of the oil industry at Aberdeen University and the surrounding colleges.

Supply demand factors as drivers – in Aberdeen once more demand – supply factors act as drivers and according to 1st quarter figures from the Halifax Price index, annual price rises in Scotland stand at 9.3%, in August 2016, while that for the UK as a whole is 10.1%. A check on house prices in Aberdeen and its surrounding districts, relating to different types of housing; flats, period properties and new builds, prices are comparable to those in some areas around Greater London. A fact, which may come as a surprise to many of us, cocooned as we are in our city life bubble. The government estimates a shortfall of 3 million homes exists at the present time.

Scotland and the cities of Glasgow and Edinburgh – the cities of Glasgow and Edinburgh, between them have a combined population of just over a million, and 8 universities, four in each city and several colleges in their patch. There has always been a steady hive of development activity by which students’ accommodation needs have been catered for. Over several decades developers and buy to let investors busy themselves working the students’ districts assiduously.

Ever present opportunities – there are constantly emerging development opportunities, which can be capitalised on, if you’re at the right place at the right time, and for those who know their patch, and are also known, they are first to be notified, when opportunities suddenly crop up. And the elephant in the room requires that you be financially ready to take advantage of such opportunities when they arise. These are hallmarks of discerning developers.

The feel good factor as relates to the property market, may come and go and irrespective of the state of the market, opportunities are always there, explained another. When asked about the negative equity phenomenon, one property developer’s response was that the phenomenon which descended on the property market in the late 80’s and early 90’s is a distant memory, and long forgotten. Negative equity was the term coined for properties losing their value – even overnight properties became worth far less than had been paid for them just a few weeks before.

Negative equity may well be a distant memory. However, it serves to remind us that while the last forty years have seen steady property price increases averaging over 9% annually it is worth stressing once more that property prices can go up but they can also come down. A cautionary tale: as distant memory it may be, but it serves to remind us that whilst the last forty years has seen steady property price increases, averaging over 9% annually, it’s worth stressing that property prices can go up as well as come down.

Healthy employment figures – among the many factors impacting on the property market, are recent UK employment figures, (August 2016) which show a high proportion of people in work compared to the years 2007-2010. The importance of healthy employment figures to the property development process lie in its relationship with other factors which impact on the market for materials, labour and income.

Traditionally, factors such as interest rates reflect the state of the market in relation to supply and demand and its impact on the property market. Interest rates is a subject to which we will return later. The simplest relationship which can be adduced is that higher labour costs can lead to higher incomes for the working population. Improved incomes in turn mean those who wish to purchase properties; flats or houses are better able to afford them.

A dynamic market is good for development – a corollary of the above, is this; the greater affordability made possible for those purchasing in any segment of the market; low, high or in the middle, the more dynamic the market is, the better it is for the developer. It means the greater the numbers of people in the market well placed to afford to purchase properties, the likelier the chances the developer has for a quick sale and turnaround, followed by a move to the next project.

A developer who takes too much of a narrow perspective, may end up paying the price, as a result of the adverse consequences which may result from ignoring details from other perspectives, even when such details are minute. For example, using wrong structural engineering calculations or failure to take account of small recommended measurements because the builder thinks you could get away with not doing so. When the correct details are ignored and corners cut, they can result in unstable structures, which end up imperilling thousands of pounds of development investment.

Property development is much like any other economic activity; retailing, banking, running or hotel or any of the businesses we see on the high street. Each one of these businesses requires coordination of human, raw materials and financial resources with the latter acting as the glue that holds the business together.

Deciding to become a property developer is an important decision. There are many considerations to be undertaken beforehand, and during the process. But done correctly, it may be rewarding, both financially and vocationally.

Factors involved in residential property valuation

The residential market is imperfect. There is no central market place as a result buyers and sellers are relatively uninformed and even their professional advisors, valuers and agents, only have a limited knowledge of what is available for sale and of what is happening in the market.

Every house, flat, bungalow or other unit of residential accommodation is unique in some respect. Even a pair of semidetached houses differ as between right-hand and left-hand units.

This makes the task of valuation much more difficult than in those markets where there are standard units or products such as stocks, shares, gold, apples and cars. It is further complicated by the fact that there is no acceptable unit of comparison.

Residential property can occasionally be compared on the basis of a price per m2 (or sq ft) of floor space, but issues such as the number of bedrooms, reception rooms, car spaces, circulation space, views and the like can all vary between properties of precisely the same floor area, thus making the total unit of accommodation the only acceptable unit of comparison.

In the past the market had seasonal fluctuations, with greater activity and steadier, possibly rising prices, in spring and early summer, a quiet period in August followed by a mini-spur in September. These seasonal movements are less pronounced today but can still be detected. They can be different in different parts of the country and significantly different between London and popular holiday areas such as the Lake District. They can be affected by significant changes in market forces such as a change in mortgage interest rates.

In addition to seasonal movements, there are cycles of under-supply and over-supply and other movements of a migratory nature such as the desire to balance proximity to work with proximity to the country, and leisure activities with travel time and cost.

In most markets increases in effective demand against a fixed supply will lead to an upward movement in price. The upward movement in price encourages suppliers to produce more and for more suppliers to enter that market. In the residential market the response to such a shift in demand is slow.

It is argued that planning controls impede the supply of land and hence the supply of new houses coming on to the market. Even without such controls there would be a delay caused by the inability of the house-building industry to raise productivity in the short run. It is difficult for the market to respond precisely to match an increase in demand in an area because land becomes available in sizeable chunks and house-builders tend to be market followers, not market creators. The result is that an increase in demand in an area may in time be followed by an over supply.

The valuer’s task is to interpret the state of the market in an area at a point in time. Currently the residential market in the UK is experiencing a period of continuing price growth which is seen to be a reflection of: people living longer, greater single occupation of property, migratory growth in population and increased demand by individuals and investment companies to acquire property on a ‘buy to let basis’. The residential sector has been identified by many, at least in the short term, as a safe place for capital.

Over a number of years changes in consumer preferences occur which can be incorporated in new home design but are more difficult to incorporate in the existing housing stock. These style changes can shift the demand and hence value patterns of an area and must be monitored. The upper end of the market can be particularly vulnerable to these changes of fashion.

Residential property has a fixed location and can only be enjoyed at that location. The enjoyment of a property will depend upon general environmental factors and specific local factors. In the case of owner-occupation, the market reflects the relationship between employment opportunities, communications, general facilities of an area and the environmental factors. Growth in economic activity, more jobs and better pay, tends to cause a rise in values because of the relatively fixed level of supply.

Analysis of the economic opportunities of an area is essential if house buyers are to make sound house purchase decisions. Current concerns of global warming may begin to affect values in areas identified as liable to increased flood risk, coastal areas at risk and greater concerns by discerning buyers for environmentally sound energy efficient homes.

Total home demand has to be translated into effective demand. Effective demand is a function of the national economy and gross national product. The valuer needs to know and to consider what is happening to base indicators such as the level of unemployment, the way employment is changing, current wage levels, and the propensity of the population to save and to invest in their own homes.

The reduction in employment during the early 1990s caused by cutbacks and closures led in some areas to reductions in value both in real terms and in money terms. Money in bricks and mortar will not always be safe.

The housing market and levels of home ownership are closely connected with the availability of credit. Effective desire can only be translated to effective demand through the availability of credit, largely in the form of funds for mortgage loans offered by the building societies, the banks and the insurance companies. Availability of, and the cost of, finance are socioeconomic elements in the market-place, as are the loan terms of such organisations. Lenders are very competitive but changes in lending policy can increase demand. Thus increases in income multipliers or joint income multipliers can increase the number of potential buyers or their potential price range.

Credit for house purchase offered by banks and building societies is dependent upon two factors: the security of the property offered against the loan, and the financial status of the borrower. Very simply, the more one earns the more one can borrow. Thus in a housing market where demand exceeds supply higher salaries and wages will provide purchasers with greater purchasing power: this balanced against the fixed supply leads to higher property prices through competition between buyers. The cost of buying, the interest payable on house purchase loans (mortgages), is outside the control of the banks and building societies in that to maintain a flow of savings to sustain a flow of loans they have to compete in the money market. As a result, mortgage interest rates can rise and fall with the world’s changing view of the British economy and with changes in the Bank of England’s base rate. Many mortgage interest rates are linked formally or informally to base rate. A rise in base rate will generally give rise to an increase in mortgage interest rates and a fall to a fall in interest rates.

The government can influence the economy, finance and hence the marketplace. Governments set minimum standards for new homes, through planning control, building, energy and health regulations. These standards affect costs, which influence developers’ attitudes as to feasibility and influence the volume of new houses in the market-place. EU regulations may also influence market forces. The requirement for a statement as to the energy rating of a property may impact on the value of low rated properties in the same way as energy ratings have led to the disappearance of most non A rated electrical goods.

The government can and has influenced the market in other ways, such as by encouraging public sector tenants to purchase their homes, by imposing rent control and protection on the private rented sector, and by changes in taxation.

The general level of values depends upon the general and area-specific levels of economic activity, community income and wealth; the existing quality and quantity of residential property in an area; the rate of addition to that stock; the point at which a local market happens to be in a particular cycle, and the underlying confidence that people within and outside a particular area have in the economic future and prosperity of that area.

The fixed location of property means that the nature of the neighbourhood and the immediate surrounding properties are crucial factors in terms of buyers’ attitudes and hence in determining a value for a property within the level of values for that area.

A number of factors affect the attitude of buyers. These factors in turn determine whether an area at a point in time is considered to be desirable with rising values, acceptable with stable values, or depressed with falling values. A similar house in each such area could have very different values.

People need property, in this context people need somewhere to live. The size and composition of the population is an indication of the number and possible size of houses required by that population. But the residential market is a local market so it is important to consider the population within a definable area and to know its composition and the extent to which it is changing. Is it an ageing population, is it growing or declining naturally and/ or by migration into or away from the area? Demand characteristics can change both across the country and within local areas. Over recent years developers have become niche operators, seeking to satisfy current demand.

Market analysis identifies the need for, say, starter homes, single-person homes, family homes, luxury homes, retirement homes, student villages. Market analysis will also identify preferences in terms of type of accommodation, design, materials, construction, internal layout and facilities.

The socio-economic composition of a neighbourhood has a major impact on values. A socially deprived or underprivileged area will display that fact in the deterioration of the urban fabric, including the deterioration in physical condition of homes. Deprived means depressed, which signifies low incomes, multiple occupations and low values.

In time, however, a combination of other factors, including the architectural and historic nature of an area, may draw in a wealthier class who will gentrify or reinstate the properties to their original condition and turn such an area into a high value area. Such movements are observable but not always predictable.

In a similar way areas historically noted for housing the wealthier owner-occupier may go into decline as large units or large plots become a financial burden and are sold for conversion and multiple letting. In time the same area may revert back to single family ownership or be substantially redeveloped for low-cost housing or high-value housing, depending upon the level and nature of demand at a point in time when redevelopment is seen as the proper solution for a declining neighbourhood.

The level of vandalism and crime are regrettably indicative of an area’s undesirability. Such changes are partly attitudinal and, like a disease, can spread very rapidly If a community senses that no one cares about an area, in particular the authorities, then the residents cease to care. The result is decline, which is immediately reflected in falling property values.

Active residents’ associations and neighbourhood watch committees show concern by the community for their neighbourhood which can stimulate pride in an area and lead to rising values. The market and market values are obvious reflections of social desirability.

The extremes of social deprivation and social well-being coincide with the extremes of values to be found within a defined geographic area. The residential valuer must be alert to the potential for change and be aware that within broadly defined residential groupings there will be pockets of properties which appear to defy logic but nevertheless maintain high values in areas of low values or areas of low values in an area dominated by high values.

Once a change in an area is signaled the value movement tends to be fairly fast as the new socio-economic group moves in to replace the higher or lower socio-economic group.

These social features are closely related to the income profile of the population and the underlying economic activity of that section of the population that predominates in a given residential area. This is further reflected in market activity. Properties in desirable areas change hands quickly, with a minimum of properties remaining vacant. Properties in declining areas tend to remain on the market for longer periods, tend to become vacant and remain vacant, deteriorate, shift to multiple occupation, and may finally be condemned.

Local politics are a reflection of and a response to these changing social and economic forces. The future of a neighbourhood can be affected by the strength of the community in political terms. Strong representation can produce improvements to schools, health and community services and dictate the attitude of the authorities to that area. Small changes on their own have little impact, but in combination can strengthen a neighbourhood. Thus the attention of the authorities to street cleaning, refuse collection, repair and maintenance of roads and footpaths, street furniture, local schools etc will all become part of the environmental picture which impacts upon buyers’ attitudes and hence on their willingness to commit themselves to a purchase at a particular price.

Physical and environmental factors help to define the neighbourhood. Those areas which are, in physical terms, well maintained and environmentally most attractive are those which are likely to become socially most desirable and hence in time occupied by the economically stronger. This tends to create a community with political strength which becomes protective and perpetuates the status of the area.

Natural and man-made features may provide the boundaries to identifiable residential areas. In some cases there may be a spill-over effect, with values declining gradually from high value areas to low-value areas. In other locations there can be pronounced changes in value either side of a building or road. Roads, particularly motorways and main commuter routes, railways, rivers, lakes, village greens, sports fields, parks may all act as boundaries.

Proximity to one or another may give rise to higher or lower relative values depending upon the desirability or otherwise of being close to such a feature. There are rarely any hard and fast rules about the behavioural attitude of the residential property market. This is because it is often the combination of many factors that creates good or bad in the eyes of the buyer. Some river locations are highly sought after, others far less so given the current increased awareness of flood risk.

Motorways and railways may act as boundaries but the combination of ease of access, visual intrusion and noise, together with other environmental factors, will determine whether they add to, or take away from value.

Soil, subsoil, natural drainage, probability of flooding, micro-climate, topography and aspect are all physical factors which historically may have determined the desirability of building in an area and may still today have an impact on values. Proximity to the right schools, shops, libraries, golf courses, country club, leisure facilities, may add to value.

But on the other hand, proximity to anything likely to cause a nuisance such as factories, sewage-works, football grounds, bingo halls, discotheques or anything that might give rise to rowdyism and general misbehaviour will tend to depress values.

Communications to the rest of the area, surrounding public open space, motorway linkages and places of employment are all very important location factors. So too, is the existing quality of development, road patterns and standard of property maintenance in determining the good, the bad and the indifferent areas of a defined residential market. Nor would it be a complete story without mentioning the importance of pressure groups in the form of conservationists, environmentalists, ecologists and politicians.

All of these have an impact on the market for residential property. Thus at a given point in time these various forces will have combined together to create a particular level and pattern of values in an area. A change in one or more of any of the forces or components mentioned will alter the supply of, or the demand for, all residential property; or for a sector of the market or just for one specific property; the result being an increase in supply or a decrease in demand or a decrease in supply or an increase in demand and a corresponding change in prices and hence in values. It would be rare indeed for only one force to be moving, so interpretation of cause and effect can be very complex. The general economic climate together with the quality of different residential areas creates a pattern of values for a defined market. Within that market the valuer must now consider the site-specific qualities of a house and its physical condition in order to assess its market value.

What the terms for different property buyers can reveal to you

There are many terms familiar to estate agents that come to categorise buyers. Take for example the term “first time buyers”. The term itself may or may not be accurate in the impression it conjures – it makes us think of a young couple with no children, but of course it could equally apply to a couple with children, or an older couple, or a single person who has been renting for a long time. So the term does not really paint a useful picture of the individual’s age. What it does, though, is give some inkling of the buyer’s position. A first time buyer has no previous property to sell and is hence chain free, and has that benefit on his side.

If an individual is identified as a “next- time buyer” in estate agent parlance that means he is hoping to move up, but the purchase of the next property may be complicated if there is an existing property still on the market. A next-time buyer, however, is likelier to have a more sizeable deposit, if the sale of the existing property goes to plan. Next-time buyers will be seeking properties with more rooms, possibly garden space, better schools around, because the move may be motivated by children, or the thought of preparing the nest for the arrival of children.

Empty nesters is a term that is increasingly common in usage. What is an empty nester? It is a couple whose children have left the family home and are hence looking to buy a different property – with a difference. While most people keep buying bigger properties as they go along, empty nesters are looking to downsize.

It makes sense to downsize in your latter years. Firstly, it frees up equity that can be used towards retirement. Secondly, the upkeep of a smaller property is easier, rather than one with lots of rooms. Thirdly, it means you do not need expend finances to keep heating unused rooms, just to keep away mould.

The government feels that empty nesters could make up one in five home buyers, and it would help relieve the housing crises if existing family homes were sold to growing families while grown families reverted to smaller homes. The empty nesters market is expected to grow and for that reason financial products catering to the elderly may be in greater demand; estate agents may also find it beneficial to have a greater number of downsizing properties on their books.

Making it as an estate agent in a world of dwindling commissions

If you are an estate agent, and have been at it for a fair while, you may remember the days when a commission of 2-3% for each sale of property was pretty standard. Then as the years went by you may recall how this figure gradually dwindled by percentages, almost like the Bank of England base rate, until it gradually became as low as 1%.

And just when you thought it couldn’t get any lower, the internet continued to slash commissions further, and periodically you had to do special promotions to get people to list their properties with you.

Could margins be squeezed any tighter? It certainly seems so. A quick Google search for the term “estate agents” will now see online agents offering to sell for fixed rates of around £650, or offering no sale no fee guarantees. How can you make it as a property agent?

Determine your minimum
The first thing you must firmly establish, and hold on to, is the minimum sum you want to make from each property sale. Never let the client bargain you down below that figure, even if they say there is another agent they are considering. If you go below what you can accept, you will find yourself unmotivated to make the sale, or to arrange property viewings. In other words, if you accept less than what you normally would, the property is a white elephant on your books, and would only take up display space in your store front. You might as well not bother. And if you show you can be pushed, you will only attract the kind of clients who want to squeeze out every pound’s worth out of you, never mind that you are already working at the bare minimum.

Emphasise what you can offer
Even if you commission rate is higher than other agents in your area, or more than the fixed fee online agents, all is not lost. You are hardly disadvantaged. Mention what you can offer for the price you charge. After all, it is not the lowest price that is important, it is value for money that people go for when it comes to deciding which estate agent to list with. In other words, if you charge more than the other agents, make sure you show how you can offer more.

Play to your strengths
Competing against an online agent? Emphasise your local presence. Emphasise to a potential client how they can walk in to your branch to chat about the property sales progress. They can’t do that with an online agent. An online agent may be willing to respond to emails, but mention how a prospective buyer can walk to your branch, discuss the property for sale and see it all in one fluid motion. You can’t do that with an online estate agent.

How do you compete with other estate agents? Find a way to use facts to your advantage. If a prospective client mentions your lack of clientele as an indication of a lack of trust, suggest how it means you will be more focussed on selling their property. If a client worries about listing with you because you have too many properties on your books, mention how your branch attracts large number of buyers because of this and the right buyer will come along.

Also emphasise your experience if it is an advantage. Show how knowledgeable you are in your field or in other areas. Always take the change to demonstrate your knowledge beyond the immediate sale, to show the buyer or seller you know about things such as flying freeholds or right to manage.

Be more prominent in your local community
Know any local events? Sponsor a stall or an annual fun run. Some estate agents sponsor school summer fairs. But why not sponsor a monthly competition, such as an art or story writing competition, where the prize is a grocery shopping voucher? Have different categories for children and adults. Parents will be urging their children to enter, and adults will be trying their luck in their own category too. Every one will be talking about your competition, and you’ll be the buzz of the town!

Or sponsor a singing competition or talent competition at a local fete where the judges are prominent members of the community. You can be fairly creative with your efforts and generate a great deal of publicity for yourself in the process!

It may pay to be more involved in your community. Elderly buyers will come to recognise your brand as a mark of trust. A word about trust though – make sure your practices build on these too. For example, try to avoid using sealed bids as a means of eliciting an offer from a group of bidders, because it leaves all but one buyer disappointed, and if you become known as the “sealed bid” estate agents for resorting to it, it does your name no good.

Be personable
Being an estate agent doesn’t mean sitting at your computer, checking emails, editing listings of properties or checking social media accounts. Get out there and be seen. Buying a newspaper? Chat to your newsagent. Make sure the people in the community know who you are by your live presence, and not just your avatar or twitter handle!

Some things to consider before investing in commercial property

Commercial property is property that is not designed or used for residential purposes, or for purposes associated with the primary industries such as agriculture and mining. The three main types of commercial property are offices (single office buildings and business parks), retail (individual shops, shopping centres, retail warehouses and supermarkets) and industrial (factories, warehouses and distribution centres). The remaining properties are those used for leisure (pubs, restaurants and hotels), sport, education, the provision of utilities and healthcare (hospitals and nursing homes).

The value of UK commercial property at the end of 2015 was £ 871 billion, about 10% of national net wealth, almost half of the value of government bonds and 40 % of the UK’s stock market. Within that figure of £ 871 billion, retail accounted for £ 360 billion (41%), offices £ 270 billion (31%), industrial £ 168 billion (19%) and other commercial properties £ 73 billion (9%). Commercial property activities employed almost 1 million people and the sector contributed about £ 68 billion (4.1%) to the UK’s Gross Value Added. (The figures quoted are taken from the Property Data Report 2016, produced by eight members of the Property Industry Alliance.) Although the residential property sector is over six times larger (by value) than the commercial property sector, the vast majority of residential properties are owned by private householders, so there is not as much scope for residential property investment as there is for commercial property investment.

About 45% of all commercial property is bought by owner-occupiers, who need land and buildings from which to conduct their business. Some of these occupiers want to buy a freehold or long leasehold interest in the property because they need certainty and complete freedom to deal with the property as the business dictates, but it does means that a lot of capital is tied up in the building. Other occupiers prefer to take a so-called ‘rack rent lease ’, where the occupation cost is paid, usually quarterly, over the period of the lease by way of rent, rather than all at the beginning. In recent years, particularly among the large food retailers, there has been a move away from freehold ownership through ‘sale and leaseback’, where the freehold interest in the property is sold to an investor (thus releasing capital for use in the operating part of the business) and the occupier takes a rack rent lease instead.

The other 55% of all commercial property is bought by investors, who buy property to let out to others so that they can make an income from the rent and a profit from any increase in the capital value of the property. Although the capital value of commercial property suffered a considerable fall in 2007 and 2008, it remains popular with certain types of investor because the average lease offers an income stream of about seven years. So the income return (or ‘yield’) from commercial property is reasonable (13.1% for directly-owned commercial property in 2015, better than UK equities and bonds). Over the 44 years prior to 2015, commercial property produced annualised returns of almost 10.9%, somewhere between gilts and equities (see page 18 of the Property Data Report 2016). Commercial property has tended not to track the performance of gilts and equities particularly closely, so including some commercial property in your investment portfolio is a way of diversifying and spreading risk. Moreover, by good management of tenants and/ or refurbishment of a tired building, a property investor may be able to enhance the value of the asset, even in times of economic downturn.

There are two ways to invest in commercial property, directly or indirectly. Direct property investment involves buying a property in your own name or in the name of a group company, letting it out, taking responsibility for managing it and selling it on when you no longer require it. Although you can employ surveyors and other professionals to assist you, this still uses up a considerable amount of time and effort. It also means that you have to find a considerable amount of cash, or a loan, or a combination of both, to fund the initial purchase. An alternative way is to buy shares or units in a company that invests in a range of commercial and residential property, such as a real estate investment trust (REIT) or an offshore property unit trust (PUT). These indirect property investment vehicles offer opportunities for smaller levels of investment, some taxation advantages, less management responsibility and, arguably, greater flexibility as it may be easier to trade units than to sell a property. However, indirect property investment is beyond the scope of this book.

So who invests in commercial property? According to figures in the Property Data Report 2016, overseas investors held the largest block of directly-owned investment property (28%); UK insurance companies and pension funds held 17%; UK collective investment schemes held 16%; UK REITs and listed property companies held 15%; and UK private property companies held 12%. Traditional estates and charities and private investors held 5% and 3% respectively. Some of the units in the UK collective investment schemes are bought by private individuals, but many are bought by the investors who also buy property directly. For example, in 2015 the UK insurance companies and pension funds invested £ 84 billion (2.8% of their total investments) in directly owned UK property, £ 57 billion (1.9%) in collective investment schemes and £ 37 billion (1.2%) in UK and overseas property company shares.

Buying to let? Some issues you may wish to consider

Property is great whether you’re looking for a steady supplement to your retirement income or a secure financial future. Most buy-to-let landlords want to become financially independent, and property is a proven investment strategy for achieving that goal. But after you sign your name on the dotted line and officially enter the world of owning rental property, you face some tough decisions. One of the very first concerns is who will handle the day-to-day management of your rental property. You have properties to let, rents to collect, tenant complaints to respond to and a whole host of property management issues to deal with. So you need to determine whether you have what it takes to manage your own buy-to-let property or whether you should employ a managing agent.

A great advantage to building wealth through property is the ability to use other people’s money – both for the initial purchase of the rental property and for the ongoing expenses. Although the availability of buy-to-let mortgages has suffered since the downturn, more lenders are re-entering this market, so choice is increasing all the time. You will need to raise a deposit and then borrow the rest of the money from a mortgage lender.

The deposit required for a buy-to-let mortgage tends to be higher than that needed for a residential mortgage, and is significantly higher since the downturn. Expect to pay at least 25 to 30 per cent of the purchase price for the best rates, although some lenders request as little as 15 per cent.

The ability to control significant property assets with only a relatively modest cash investment is one of the best reasons to invest in bricks and mortar. For example, you may have purchased a £100,000 buy-to-let property with a £20,000 cash deposit and a mortgage for the remaining £80,000. If the property’s value doubles in the next decade and you sell it for £200,000, you will have turned your £20,000 cash investment into a £100,000 profit. This is an example of capital appreciation, where you are able to earn a return not only on your cash investment but also on the entire value of the property.

Rental property also offers you the opportunity to pay off your mortgage using your tenant’s money. If you’ve been prudent in purchasing a well-located rental property in a stable area, you’ll have enough income to pay the interest on your mortgage, as well as all the expenses, maintenance and insurance.

Over time, your property should appreciate in value while your tenant is essentially paying all your expenses, including the interest on your mortgage.

Your lender and tenant aren’t the only ones who can help you with the purchase of your rental investment property. Even the government is willing to offer its money to help your cash flow and encourage more people to become landlords. In calculating your income tax obligations each year, the government allows buy-to-let landlords to offset their rental income against interest payments on their mortgage and certain expenses. For example, you can claim 10 per cent of the annual rent for wear and tear on fixtures and fittings in furnished properties.

Over time, rental income generally outstrips operating expenses. And after your tenants have finished paying your mortgage for you, you’ll suddenly find that you have a positive cash flow – in other words, you’re making a profit.

One of the first steps in determining whether to completely self-manage your rental property or delegate some or all of the duties to other people is to analyse your own skills and experience. Many very successful property owners find that they’re better suited to deal-making, so they leave the day-to-day management for someone else. This decision is a personal one, but you can make it more easily by thinking about some of the specifics of managing property. Property management requires basic skills, including marketing, accounting and people skills. You don’t need a university degree or a lot of experience to get started, and you’re sure to pick up all kinds of ideas on how to do things better along the way.

If you’re impatient or easily manipulated, you aren’t suited to being a property manager. Conveying a professional demeanour to your tenants is important. You want them to see you as someone who will take responsibility for the condition of the property. You must also insist that tenants live up to their part of the deal, pay their rent regularly and refrain from causing unreasonable damage to your property.

Good management leads to good financial results. Having tenants who pay on time, stay for several years and treat the property and their neighbours with respect is the key to profitable property management. But, like most things, it’s easier said than done. One of the greatest deterrents to financial independence through investing in rental property is the fear of management and dealing with tenants.

If you choose the wrong tenant or fail to address certain maintenance issues, your buy-to-let investment may turn into a costly nightmare. By doing your homework in advance, you can reduce those beginners’ mistakes. Experience is a great teacher – if you can afford the lessons. If you already own your own home, then you already have some basic knowledge about the ins and outs of owning and maintaining property. The question then becomes how to translate that knowledge into managing rental property.

As a landlord, you may choose to handle many responsibilities while delegating some of them to others. Look at your own set of skills to determine which items you should delegate. A contractor may be able to handle the maintenance of your rental property and garden more efficiently and effectively than you can.

The skills you need to successfully manage your own rental properties are different from the skills you need to handle your own property maintenance. Most buy-to-let landlords find that using trusted and reasonably priced contractors can be a valuable option in the long run.

Ultimately, you can delegate all the management activities to a professional managing agent. But hiring a managing agent doesn’t mean you’re off the hook. Depending on the arrangement you have with your agent, you may still oversee the big picture. Most agents need and seek the input of the property owner before they start so that they can develop a property management plan that meets the owner’s investment goals.

Keep in mind that no one else will ever manage your rental property like you will. After all, you’re more motivated than anyone else to watch out for your buy-to-let investment interests. Only you will work through the night painting your property for the new tenant moving in the next day. And who else would spend his annual leave looking through the local newspaper classifieds for creative ad ideas?

You may find that a managing agent can run the property more competently than you can. Many buy-to-let landlords possess the necessary skills and personality to efficiently and effectively manage their rental properties, but they have other skills or interests that are more financially rewarding or enjoyable. Hiring professionals and supervising them is often the best possible option.

Considering property management? Hone your people skills first

Real estate is a great source of income, whether you’re looking for steady, supplemental retirement income or a secure financial future. Most residential rental property owners want to become financially independent, and real estate is a proven investment strategy for achieving that goal. But after you sign your name on the dotted line and officially enter the world of rental property ownership, you face some tough decisions.

One of the very first concerns is who handles the day-to-day management of your rental property. You have units to lease, rents to collect, tenant complaints to respond to, and a whole host of property management issues to deal with. So you need to determine whether you have what it takes to manage your own rental property or whether you should hire and oversee a professional property management firm.

Owning investment real estate and managing rental units are two separate functions, and although nearly everyone can invest in real estate, managing it takes time, special skills, and the right personality. The importance of relationships with people cannot be neglected because property management is really people management? There are advantages of owning rental property and you should assess whether you have what it takes to manage your own property.

Some rental property owners find themselves managing their own properties without even knowing what management requires. Managing the physical aspects of your properties (the buildings) and keeping track of your income and expenses are fairly straightforward tasks. However, many rental property owners’ most difficult lesson is the management of people.

Rental management requires you to deal with many more people than you may think. In addition to your tenants, you interact with rental prospects, contractors, suppliers, neighbours, and government employees. People, not the property, create most rental management problems. An unpredictable aspect always exists in any relationship with people. As with most businesses, the ability to work with people is one of the most important skills in being a successful property manager. If you enjoy interacting with people and are adept at working with them, you’re off to a good start toward becoming a prosperous property manager.

Documenting Rights of Way

If you are buying a residential property, it usually seems straightforward enough. Check out the length of the lease or freehold, and other things like ground rent, and leave the rest in the hands of your conveyancer. Of course, if you are one of the growing many who are increasingly managing their own conveyancing, then yes, there are a few more things to look into. It is difficult with doing it the first time of course, as there are the normal uncertainties associated with learning something for the first time, but once you have done it there is the confidence and pride in knowing you’ll be saving yourself some money in solicitor fees, and a whole lot of time expense, in that you won’t have to be ringing you conveyancer for status reports because you are now the conveyancer!

 

Some may argue that the majority of decisions involving property purchases are all done before looking at the property itself. Questions like “Which area is it in?”, the council tax, parking restrictions if any, are the kind of questions that precede a purchase and which may even influence the decision to arrange a viewing in the first place. Some buyers, for example, would discount a property on the basis of the lack of off-street parking – which is fair enough. If you are considering about  purchasing a property on a busy road and learn that you would have to park your beloved car three streets’ and five minutes’ walk away the parking would make a difference enough for you to look into another property.

 

For some, off-street parking really makes a difference. Who would risk a precious car out on the road, or on another road out of vantage point? The availability of off-street parking in big cities also means the lack of a need to monitor parking restrictions in the area because you would be parking on your own land.

 

The property ombudsman was recently called to investigate a complaint against one of its member agents by a buyer who claimed to have been mis-sold a property by them.

 

The buyer had bought a property with vehicular access to the rear, adjoining two other properties he already owned. These latter two properties did not have parking facilities. Essentially it can be assumed that the buyer had bought the property with the intention to link all three together with parking facilities.

 

The issue did not revolve around the properties themselves, but rather the access to them, which the previous seller had assumed was via a common road; hence the buyer was somewhat surprised, perhaps slightly taken aback, to be informed that the road was actually part of a neighbour’s property and he did not have right of way over it.

 

The buyer raised the issue with the ombudsman because he felt that the estate agent had misrepresented the property.

 

The ombudsman’s investigation found that the estate agent had taken reasonable steps to ensure that the description of the property was accurate. The seller had assured the agent that the sales descriptions were accurate, and assured the agent about the access, so while the buyer ended up with a property which he, in all likelihood, would have to arrange access arrangements, it was not through any negligence on the part of the estate agent.

 

The scope of the ombudsman investigation did not extend to the seller himself, but only within the remit of whether the estate agent had been in any way at fault. Having gone through the company file the ombudsman was satisfied in the decision not to uphold the claim by the buyer.

 

Access to the property is a matter that the buyer should have raised with their solicitor in order to request documentary evidence before exchanging contracts.

 

A lesson to also take away is that if there are any grey areas where further investigation is needed, the details should not form part of the sales particulars until confirmed. In this area the ombudsman did not find against the estate agents because they had acted in good faith with assurances from the seller.

 

Also another lesson to take away: While in this case neither buyer or seller were doing their own conveyancing, if you are ever thinking of going down that route in the future, make sure to examine all areas carefully. The seller had been going up and down that road for forty years and had assumed a public right of way. Never assume anything!

 

Conduct due diligence before buying by auction

Buying a property by auction is a method that seemingly circumvents the long drawn out process of submitting multiple offers for a property, then waiting for the estate agents to get in touch with the sellers before returning with a counter proposal. Ever bought a property the common way before? You ring up various estate agents to be on their books, scour property websites, book an appointment for each potential viewing, second viewings for more attractive properties, submit a low bid, wait for the agent to get hold of the buyer, get back to you, and then repeat multiple times until a satisfactory bid is accepted. And that is not even half the tale. The problem is that in between the various stages, there can be significant time lags, some on your part, some on the agents, and some on the buyer. Some of these delays can be intentional, and some can be deliberate.

You might disagree with the last statement in the previous paragraph. Deliberate delays? By yourself?

Let’s give an example. Perhaps you have viewed a property and like it. You would want to make an offer to avoid another buyer snapping it up, but make an offer too soon and the agent and seller know you are keen. Your first couple of offers are likely to be rejected. Remember that the agent is working for the seller to get the best possible price, and not for you, and will keep pushing you back until he senses he has extracted every last pound from you. Your rate of response is an indicator of how keen you are on the property, and also a hidden signal of how much more you can go. Hence while you are eager to get hold of the property, you may feel it is wise to slow down any counter offers you make or any further contacts with the agent, to give them the impression that the property is not all that important to you. It is a way of making them sweat instead of you.

Of course, estate agents are wise to these antics – they themselves partake in it. When they say they will get hold of the seller right away, do you really think they are ringing the seller every twenty minutes until he picks up? More likely they will leave it until the end of the day, or tell you the next time you’ve rung that they haven’t heard back yet. They are deliberately introducing delay to make you get jittery and also to flush out your interest. And this is done to multiple buyers to extract the best property price. And in doing so, the best commission.

But in the process, a lot of time is wasted.

This is perhaps why a sale by auction draws so many. It is a scenario where all cards are on the table, all offers presented in public view – unlike a sealed bid process, where all cards are presented to the estate agent without any form of public scrutiny.

Buying by auction seems a simple enough progress. There are many ways to go about it. Before an auction takes place, all buyers view the property in order to ascertain a bidding strategy and the upper limits to which they will bid. It is important that a viewing be made as there are many things that can be gleaned away from the sales brochure. While agents are bound to market the property responsibly, they are looking to get a commission by sale and would of course market it in the most positive light. You cannot go by the sales brochure alone.

Potential buyers may make their interest known to the marketing agent, and their bid acts as a reserve.

On the day of auction, bidders either attend in person, or send a proxy to represent them in the auctions.

A property auction can be a strange scene. A room with some bidders in person, some on the phone with clients, the agents trying to draw prices towards or above the reserve. Sharks circling for the kill? Perhaps, but sharks would only come if there is food for the taking.

The importance of having viewed the property prior to auction cannot be stressed. The Property Ombudsman was recently called to resolve a dispute between a buyer and an agent.

The dispute centered around an auction property that had been incorrectly described as having two bedrooms instead of being listed as the one bedroom property that it was in reality. The error was only corrected at the last minute. The marketing agent found out only the night before and endeavoured to contact those who had submitted bids, presumably to get them to notify him of a withdrawal if they did not want to continue. At the property auction the property was clarified to be a one bed property, and as could be expected, the winning bid did not come from any present among the bidders. Instead it came from one the agent had received a prior written bid on.

The property ombudsman had to mediate between the “winner” who claimed the agent had misrepresented the property. It found that the buyer should have been aware of what was being purchased and done his own due diligence, but it also found that the agent should have made better attempts to get in touch with the buyer to ensure that the change in sales description was acknowledged.

The agent was asked to recompense the buyer to the tune of £750 but there was no compensation for the difference between the price between a two bed flat and a one bed flat.

Buying by auction presents conveniences but don’t be misled. There are responsibilities on the part of bidders and agents that arise as a result. If you are considering buying by auction, it goes without saying you absolutely must see the property before buying!

The UK’s quick house sale sector

On 18 April 2013, the OFT launched a market study looking at the UK’s quick house sale sector.

They wanted to find out whether this sector works well for consumers, whether any practices give cause for concern and, if so, how such practices should be remedied. They had also noted potential similarities with the sale and rent back sector and wanted to establish whether similar concerns arose.

Quick house sales can be beneficial to home sellers who want the certainty of selling their property relatively quickly, without trying to sell on the open market. There was concern, however, that some unfair trading practices may prevent home sellers from making informed choices when selling their home. In addition, there may be a disproportionate impact on vulnerable groups, such as those in financial difficulty who need to clear debts and/or avoid repossession, and older people.

Some trading practices may lead to sellers receiving not just a below market value price for their home, but a sum much lower than the amount the provider had led them to believe they would get.

Practices that gave rise to concern included:

•reducing the price offered at the last minute after the seller is financially committed to the transaction;

•making misleading claims about the value of the property or the level of discount to be applied to the sale;

•falsely claiming to be a cash buyer;

•unclear fee structures, for example, imposing an unexpected fee following an initial valuation, as a condition for progressing the service;

•inducing home sellers to enter into agreements that prevent them from selling to other buyers, with severe penalties for breach of contract.

The launch of the market study included a public request for information, seeking to hear from people with experience of this sector, including home sellers, providers, valuation experts, estate agents and debt advisors. They also carried out a survey of providers and held roundtables with providers and with a number of stakeholders. The information received helped them to build up a picture of the sector.

As part of their research they:

Analysed over 160 websites, for information about providers and to see their claims about the service they provide; and reviewed Companies House data, for company and officer information;

Considered 23 provider survey responses (out of 74 providers approached), and held a provider roundtable (attended by 13 companies), for more detailed information about providers and their practices, processes, business models and customer feedback;

Reviewed 111 public responses to their request for information, including 72 home seller complaints, plus follow-up telephone interviews with 20 complainants and analysis of other complaint data, to understand home sellers’ experiences and identify possible breaches of consumer protection law;

Engaged with stakeholders including government bodies, enforcers, consumer bodies and advice services, charities, professional standards organisations and trade bodies, for information that would inform their study;

Organised a roundtable workshop with consumer stakeholders to examine how the quick house sale process affects particular consumer groups and what good and bad business practice looks like;

and obtained HM Land Registry research, to provide data on properties bought and sold within a six month period, and conducted a survey of RICS surveyors, to help estimate the size of the quick house sale sector.

Quick house sale providers are businesses that offer to buy a property or find a third party buyer very quickly, but usually at a ‘below market value’ price.

The OFT have identified almost 120 such providers operating in the UK. It is hard to count them because some providers operate multiple websites. There are probably many more providers, particularly local ones advertising through the local media and by leaflet drops. Not all providers offer the same service:

•some buy properties direct from home sellers, either for resale or to let(when they do this, they refer to them in this report as ‘buyers’)

•some broker sales, that is they seek to introduce home sellers to third party buyers and may take steps around progressing a sale (when they do this, they refer to them in this report as ‘brokers’). Brokers can be instructed by either sellers or buyers, or both. When a prospective seller gives the go-ahead, a broker looks for a buyer from their list of investors, from quick house sale buyers and other contacts, or by advertising the property on the open market

•some identify home sellers and pass on details (or ‘leads’) to other quick house sale providers (they are sometimes called lead generators). Some providers buy some properties and broker the sale of others. Some lead generators may also sometimes broker.

How do providers profit from quick house sales?

•Most buyers try to resell the property as soon as they can for a higher price than the one they paid the home seller.

•Some buyers let out the property and receive a rental income (and sell later).

•Some brokers are paid a fee by the seller (like a traditional estate agent).

•Some brokers are paid a fee by the buyer.

•Some brokers agree a price with the seller and another price with the buyer, and receive the difference between the two prices.

•Lead generators receive a fee from the buyer or broker: a fee per lead (or batch of leads) and/or a referral fee if a deal goes through

From the upfront claims they make on their websites, most providers appear to be buyers.

However, from close examination of their websites and from what providers told us, they believe this may not be the case. Whether the provider is buying or brokering can have implications for both the speed of the sale and the discount on market value.

Brokers have less control over the purchase than buyers: they have to find a third party buyer, one who will pay at least the offer price, and one who can finance the deal quickly. There seems to be a greater risk that home sellers’ expectations might not be met. Home sellers should therefore seek extra assurances that brokers can deliver deals as promised before doing business with them.

Providers that fail to explain their services adequately to home sellers may be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) for misleading claims and/or omissions in particular. When providers broker, the OFT considers those activities are likely to involve estate agency work (as defined by the EAA), in which case they must comply with the requirements of the EAA and associated legislation.

The service on offer is one key feature to consider when looking at providers. Another is how the purchase will be paid for.

Quick house sale buyers or, in the case of brokers, third party buyers, may pay with cash funds that:

•are available immediately;
•will be freed up once another property is sold;
•will be raised from investors; or
•will be borrowed from a lender.

This too has possible implications for the speed of the service and the final offer price. A buyer with funds available immediately is likely to be in a better position to finalise a quick sale than one that needs to free up funds or secure finance. Problems with funding may cause both hold-ups and an attempt by the provider to renegotiate the sale price. Home sellers should ask questions to clarify whetherthe buyer can pay for the property and will have funds ready on time. Providers, to minimise the risk of a breach of the CPRs, should disclose how the buyer intends to pay for the property. Similarly, in order to minimise the risk of breaching estate agency legislation,brokers should not misrepresent the status of a prospective buyer, which would include their financial standing.

Lead generators are not really providers at all. They do not make deals with home sellers. They are themselves unlikely to be able to deliver either a speedy sale or a particular sale price because those things depend on buyers or brokers. They include them as ‘providers’ only because, from their upfront claims, they are currently hard to distinguish from buyers or brokers and will look like a provider to the home seller. What they actually do is an ancillary service. They attract interest from sellers and sell on the details to other providers.

Not all quick house sale buyers or brokers use lead generators, but some do. Lead generators must comply with the CPRstoo. Their claims, for example about their service, the speed of the quick sale, the offer price and the financial status of the buyer, must not mislead. Lead generators should also check whether they are engaging in any activities that fall within the definition of ‘estate agency work’ under the EAA. If they are, they will need to comply with the requirements of the EAA (and subordinate legislation) when they carry out those activities. If necessary, they should take independent legal advice on this matter.

Flying freeholds: possible arising disputes

Whether you are an estate agent, or seeing to buy a property, it is always a good idea to understand the terms you may encounter during the conveyancing process, not just so that it expedites the process – which, if you are a property hunter, means you spend less time talking to the solicitor who is charging you by the hour – but also so that there is common ground and understanding that prevents any issues at a later stage. It is more difficult to break away at the later stage of the buying process because you may feel you have already invested too much time and money already, and the pressures of time – if you need to have a property to move in to soon – may mean that you have to go along with the purchase even if you are not entirely with aspects of it. Another situation that may arise is that the mortgage lender may not be willing to lend, grounding the whole process to a halt. So while it may seem like a hassle to have to familiarise yourself with these new terms, it is a worthwhile investment

One term that may cause a fair bit of confusion is the term “flying freehold”. Many people assume this to be a case of the freehold of a building being transferable to another party, or having some sort of fleeting existence, but that is not the case. The term actually has some physical connotations. A flying freehold actually refers to a freehold of a property that overhangs another space. For example, if an apartment is built in an overhanging archway, that freehold does not cover the space below the dwelling. The apartment has a flying freehold. But this does not mean you should start getting your tape measure out and calculating the overhang area of guttering and drain pipes. The flying freehold element only refers to spaces which are habitable and space taken up by chattels are not usually considered.

Nevertheless, if you have any doubts our concerns about the possibilities of a flying freehold you should notify your conveyancer so that this can be checked out fully at the start of proceedings. It is also a good idea to mention this to your mortgage lender. It demonstrates to everyone that you are on the ball and proactive!

As an estate agent, it is a good professional practice to inform the buyer if a flying freehold does exist. Yes, while you may argue that the estate agents have an obligation to the seller more than the buyer, it is professional to mention this to the buyer if they are not aware of it, as they will certainly want to investigate it. It would save you time and money down the line and avoid the situation where a potential buyer withdraws or their mortgage lending falls though. And if you do sell a property with a flying freehold, the buyers may come back to you in future if they decide to sell, simply because they know you are thorough in your approach, and, well, you have sold the property before and know it well!

Solicitors, or more accurately in this case, conveyancers, need to be mindful of the possible scenarios that flying freeholds may entail. If you are purchasing a property with a flying freehold, a conveyancer should advise you both on the difficulties which may arise. For example, some mortgage lenders may not lend on a flying freehold. And you must certainly always find out who should bear the responsibilities of repair or how they are divided, as this is almost always an issue that will arise in time. And even if getting a mortgage is not a problem, for example, if you are a cash buyer, a conveyancer should inform you about the existence of flying freeholds simply because while you may think you are relatively unaffected by it, it may affect a future buyer who may have difficulties getting a mortgage for your property, or have reservations about buying it. Your purchase of a flying freehold property may make it harder for you to sell in the future. Enough said, don’t hide your head in the sand, or leave it to the conveyancer or mortgage lender. Knowledge is power!

For a flying freehold to exist, part of the freehold property that is being bought must overhang part of another person’s freehold property, and the overlapping area must be of a significant size, allowing for habitation. In some properties, such as semi-detached ones, this scenario may be fairly common. For example, part of the bedroom of one house may be sited above the lounge of a neighbouring house. A more common example is seen in properties where a room is built on an arch that allows a road through for parking at the rear of the property. If the area that overhangs is a space merely limited to chattels such as drain pipes or guttering, then the property is not said to have a flying freehold; conveyancers speak of these as having a right of ‘eavesdrop’.

But what if you live in a block of converted flats, where one property entirely sits directly on top of another?

If all the owners in the block collectively own the freehold, then the property is said to be a leasehold property with a share of freehold. The flying freehold principle does not apply, but nevertheless, the mutual obligations of property owners mentioned below may still do.

Flying freehold properties have mutual obligations to each other. The upper property should have a right of support from the lower one, while the lower property should enjoy a right of shelter from the upper one. If you live in a semi-detached house where one bedroom is directly over your neighbour’s lounge, then you have responsibilities to maintain your property so that it does not have any impact on your neighbour’s. Your floor is your neighbour’s ceiling, in the overlapping area, and if you do not maintain your own roof, causing your floor to flood, then your neighbour’s ceiling will be adversely affected too. Any major works that you carry out within your own property, for example, for example, in replacing floorboards must also not adversely affect your neighbour or the value of his property.
If you purchase a property with a flying freehold then you also have responsibility to the area under it, particularly with regards to maintenance.

If you have a property that has an area overhung by your neighbour’s property, then while your neighbour has the flying freehold, you have what is known as the creeping freehold. Your obligations to your neighbour above are the same as your upstairs neighbour’s obligations to you. You should not do anything within the confines of your property that will jeopardise your neighbour’s.

Estate agents and conveyancers should always advise buyers on these obligations at the outset to avoid any misgivings or disputes in the future between affected parties.

Most parties with flying or creeping freeholds usually work things out amicably but sometimes relations may sour and lead to dispute.

If the property you have is overhung by your neighbour, are you entitled to go into your neighbours’ property to carry out works? And if such works are enforced, are you entitled to recover the cost from them?

A landmark case regarding flying freeholders was the case of Abbahall v Smee (2002). The property owner with the flying freehold allowed it to fall into a state of disrepair, thereby affecting the property below. Loose masonry was falling onto the public thoroughfare below, affecting visitors to the ground floor property.

The court ruled that the owner of the property with the flying freehold had responsibilities to the party below, although the costs of the roof repair to the flying freehold property were borne in a 75/25 split by both parties as they would equally benefit from the repair.

If your property overhangs another, the Access to Neighbouring Land Act 1992 allows you legal provisions to go to your neighbour’s land to carry out repairs to your property. Of course, a simple word with your neighbour and mutual understanding is usually enough without having to apply for a court access order. But if you have to go the legal route to carry out repair, you will probably have to indemnify the other owner against any loss, damage or injury.
Perhaps a lesson to learn is that if you are buying a property with a flying freehold, or any property for that matter, make sure you can get along with the neighbours!

And what do mortgage lenders make of flying freeholds? Their view of it varies. Some lenders will avoid lending on such properties, while others will consider it only if the overlapping area falls under a certain percentage of the whole property. Some lenders will lend only if there is flying freehold indemnity insurance. Either you or your conveyancer should inform the mortgage lender of the existence of a flying freehold as soon as possible.

A flying freehold property is perhaps best thought of either as one whose structural integrity is dependent on another property, or where that overhangs another property in a way that has bearing on it. Either way, there are implications that property buyers, conveyancers and mortgage lenders should be aware of!

Would you use a buying agent?

What is a buying agent? To use the full term, a residential property buying agent is an individual or a property company that act on the instructions of the buyer to locate a suitable property and negotiate on their behalf. Who uses a buying agent? It could be someone who is an overseas buyer, and who needs the presence of a local, in-country agent to handle such a purchase. But it may also be an individual who is already in-country, but does not want to deal with the hassle of a property purchase.

But why, if you are purchasing a property, would you not want to be involved in its developments? Two main reasons stand out. The first is time – individuals who use a buying agent are usually too busy to handle the property search themselves. Secondly, it is for anonymity – if a well-known person was looking for a property, and wished it not to be widely known, a buying agent affords a level of third-party anonymity.

If you are considering using a buying agent, there are various regulations that would be useful to be aware of.

Associated Services

You are not obliged to use any associated service which is offered by the agent. In other words, while an agent may suggest to you to use their recommended financial adviser or surveyor, you have no need to do so. You are entitled to use your own financial adviser, legal representative, or surveyor. You may think that in using the buying agent’s recommended personnel, the buying process may be sped up because of established relations between the parties, but this may not necessarily be so. And it is good to consider that buying agents may receive kickbacks from such recommendations, so you may find yourself paying higher costs to their recommended service agents, which eventually flow back to the buying agent themselves.

You are entitled to decline such services – don’t let the agent pressurise you into one, or make you feel bad about it. The refusal of such services should also not prejudice any offers or viewings through the agent.

Duty of Care

It is customary that a buying agent must always work in the best interests of their client, that is to say the person who is paying for the agency services. The estate agent should treat, all those involved in the proposed sale or purchase fairly, and with courtesy. If the buying agent or one of his staff, has any personal or business interest in the property, the buyer or seller, must be told as soon as possible in writing. That is to say, if the buying agent, for example, is advising the client to buy a property that the agent has a stake in, this must be made clear at the outset.

Fees and charges

An agent must inform the buyer in writing, before they agree to use his service, what fee (including VAT) is payable and when the fee is due. It must be stated clearly whether the fee is a fixed price regardless of the achieved buying price or whether it is calculated as a percentage based on that achieved buying price.

Illegal / Criminal Activity

Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

Marketing

The selling agent must describe the property as accurately as possible and not misrepresent the details.

Agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 to describe a property truthfully and provide material information to allow potential buyers to make an informed transactional decision. Sales particulars should give a general description of the property and will highlight, for instance, the type of heating, double glazing installed, or appliances or furnishings that may be included in the sale. The buying or selling agent will not have tested any facilities but if they are of particular importance to you it is wise to question the agent further to allow him to and he can ascertain the relevant information from the seller or the sellers agent on your behalf.

Negligence Claims

Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.

Offers

The buying agent must record all offers received and not conceal, misrepresent, withhold or delay communicating offers. It is the seller who decides whether to accept an offer; to reject an offer; when to stop marketing the property after an offer has been made, and to whom to sell the property to and at what price.

Terms of Business

All buying agents must give their clients written terms of business. The buying agent must clearly explain all fees and charges and tell you if any fee will be payable if you withdraw your instructions to buy the property.

When dealing with the agent you should ensure that you understand:

The fee that will be charged and whether it is based on a sliding scale according to the eventual sale price is at a set amount.
How long the agreement runs for; how you can terminate it and with what period of notice is required.
Whether you will have any continuing liability to the agent for a fee if you do terminate the agreement.

In particular you should:

Realise that when you sign the agreement you are entering into a legally binding contract under which you may be liable for fees.
Ensure that you have read and understood the terms of the agreement and the commitments you have entered into. Do not feel pressured into simply signing it and be aware that if you sign the document in your home or at your place of work you are entitled to cancel it within 14 days.
Make sure that you receive copies of all relevant documents such as the agent’s terms of business.

The Estate Agent

He is instructed by the seller of the property and whilst he has a responsibility to treat any prospective buyer fairly, his client, (the person paying for his services), is the seller. Both selling and buying agents are required to act in the best interests of their clients. They have no control over the legal process but will generally assist in checking on the progress of the purchase and, if agreed, in handing keys over on completion of the sale. Buying agents can also neogtiate on you the buyers behalf if instructed.

The Legal Representative

A Licensed Conveyancer or Solicitor and will progress the formalities of the sale and determine with the seller and the buyer the potential dates for exchanging contracts and completion.

The Mortgage Provider

If you require a mortgage to buy the property you may be dealing with a bank or building society, either directly or through an adviser. The agent is not allowed by law to give you any financial advice but he might refer you to an adviser with which he has links or which is a separate part of the same company. The agent will not have access to the records of the mortgage provider or adviser and has no control over the progress of any mortgage application.

The Surveyor/Valuer

Instructed by the prospective buyer or their mortgage provider and will offer various surveys from a general valuation report to a structural survey. Unless the mortgage provider specifies otherwise it is the buyers choice as to the type of survey undertaken.

Considering a Quick House Sale?

We often run into temporary signages promising quick house sales. While this is a eye-catching solution to those who need to sell their property fast, wish to avoid dealing with solicitors, or cannot afford to hang around for what seems like prolonged periods waiting for details to be finalised, it is advisable best to be cautious – after all, everything has a catch, a string attached somewhere.

In a quick house sale, a business (provider) offers to buy the property or find a third party buyer very quickly. In return, the seller usually accepts a ‘below market value’ price for their home.You should think carefully before opting for such a sale. These top tips should help you when deciding whether you really need or want a quick house sale. If you decide to go ahead, they will help you to choose a provider, spot the things that could go wrong, and understand how to prevent problems.

1. Consider all your options
There may be more options than you think. They might help you to keep your home if you don’t want to sell or to sell at a better price.

2. Take time to find out about the process
What are the pros and cons? How does it compare to alternatives such as using a normal estate agent or negotiating with your lender? Will a quick house sale provider suit your specific needs?

3. Look for the services that work best for you
Not all providers are the same, so look at what different ones can offer. Don’t accept their claims at face value. For example, if the provider says ‘completion in days’ or ‘we pay close to full market value’, ask how often they do this.

4. Check out providers’ credentials
If providers say they have signed up to a code of practice, redress scheme, or are regulated by an official body, check this for yourself. Also check to see what protection the code of practice, redress scheme, or regulation offers you.

5. At each stage, make sure you have the information you need to make informed choices
If you don’t understand something, ask the provider for answers and don’t proceed unless you are happy with them.

• Who is buying the property?
• How will they pay?
• Is there proof that they have funds available?
• When will the sale happen?
• Who is valuing the property and how?
• What is the offer price? Will this change? If so, why?
• If the survey is given as a reason fora reduced offer, ask to see it.
• What fees and charges will you have to pay? Will you have to pay them even if you don’t go ahead with the sale?

We would advise choosing providers who offer you the information listed above without having to be asked for it.

6. Never accept verbal information or promises
Always get the provider to put them in writing.

7. Don’t be pressured into a decision you are not comfortable with
For example, the provider should not require you to use a particular solicitor.

8. Before you sign any agreement, read it carefully and obtain independent legal advice if you are at all unsure

Do you understand what you’re being asked to sign and its implications? Don’t sign an agreement unless you know what you are agreeing to. Also, never be shy about negotiating on price.

9. Watch out for long tie-ins

Be wary about signing any agreement that ties you to the provider for a longer time than you are happy with. If you want a speedy sale, question why a quick house sale provider would need an agreement for more than four weeks.

10. Be honest and accurate when answering questions
Giving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price. In some cases the sale may even fall through.

11. Don’t commit to the sale until surveys and legal checks have been carried out, you have a final offer in writing and you have independent legal advice

Be cautious of making major financial commitments, or other decisions you might regret if the sale did not go through as expected.10. Be honest and accurate when answering questionsGiving incorrect information or leaving important things out is likely to be uncovered later and may cause hold-ups and even reductions in the offer price.

If you are still unhappy, you can:

• Talk to Citizens Advice. They providefree, confidential and impartial advice.Visit www.adviceguide.org.uk or call the consumer helpline on 08454 04050612.

12. What if things go wrong? If you are not satisfied with the provider’s service, tell them and give them a chance to investigate and resolve your complaint.

• If the complaint is about the provider’s advertisements, report the matter to the Advertising Standards Authority. Visit www.asa.org.uk or call 020 7492 2222
• Report the matter to your local Trading Standards Service
• Consider whether to take your own court action if you feel the provider may have: breached the contract, used an unfair term or misrepresented something that was important to your decision to sell to, or through, them. You should obtain legal advice first.

Guidance and Information for Residential Leasehold Block Management

Who is responsible for Buildings Insurance?
The responsibility for insurance for the building and common parts will normally fall on the freeholder, but this expense is normally recouped through the implementation of service charges.

What are Common Parts?
Common parts are parts of the building not owned solely by one leasehold occupant. Put simply, they are the common areas such as stairwells, main entrance doors, communal gardens or lifts. The maintenance of these are the responsibility of the freeholder and the cost is shared through service charges.

What is Ground Rent and who pays it?
If you are a leaseholder, it is likely you will have to pay ground rent to the freeholder. Your leasehold covers the cost of your own flat or dwelling; your share of the ground rent is normally divided by the number of flats in the building.

Who is the Freeholder?
The freeholder is also sometimes called the superior landlord. The freeholder owns the building – this includes the individual flats and communal areas. The freeholder leases the individual flats to the leaseholders. If you have bought your flat as a leasehold flat, you will need to renew the lease before it runs out, through agreement with the freeholder.

The freeholder is usually responsible for the maintenance and repairs of the building; however costs for maintenance and repair are usually recovered through service charges. It is not uncommon for freeholders to invoice leaseholders for additional repairs to the building.

Illegal / Criminal Activity
Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

What is the Lease?
The lease is the official document that sets out the contractual obligations between the freeholder and the leaseholder. If you purchase a property, you are buying the terms of the lease. When a leasehold property is sold and changes hands, the rights and responsibilities of the lease are transferred by the seller to the purchaser.

Who is the Leaseholder?
The leaseholder is the party that is leasing the property subject to the terms of the lease. If you are buying a property on leasehold, unfortunately it is as if you are still renting from the freeholder. You might not be paying rent, but you still have a limited time on your property before you need to renew the lease. Leaseholders should be aware of all conditions set out in the lease. Sometimes the freeholder may grant you a new lease on purchase but it is usually unlikely, because it is easier to manage the leases of all flats if they are concurrent. Leases are usually granted on a 99 or 999 year basis, and it is advisable to renew them before they run down to 20 years, because then the advantage lies with the freeholder. If you are a leaseholder, it is best to negotiate a new lease with your freeholder before that stage.

What does the Letting Agent do?
A letting agent is an estate agent that the leaseholder may instruct to find a suitable tenant. The responsibility of the letting agent may also extend to the management of the property in the absence of the leaseholder. In other words, a leaseholder who has bought a property may not necessarily reside in the property, preferring to rent it out. The leaseholder may ask a letting agent to look for a tenant. The responsibility for dealing with the freeholder nevertheless still lies with the leaseholder. The letting agent is merely the intermediary between the tenant and the leaseholder, and neither the letting agent nor tenant should ever have to deal with the freeholder.

What is a Resident Management Company and what does it do?
If a group of leaseholders intend to amend the management of their property, either through themselves, or through the formation of a new company, they have a legal right to buy the share of their freehold. The Commonhold and Leasehold Reform Act 2002 makes provisions for the governance of a freehold to a company set up by the leaseholders, or to the leaseholders themselves. This allows leaseholders as a group to decide the management arrangements for the building. This is particularly useful if the current leaseholders feel that the management of their property is not to their satisfaction – e.g. if the maintenance of common areas is not frequent, or if freeholders are not seen as being pro-active – and would prefer to have more control over how the property is managed.

How is a Residential Leasehold Management Agent different from a Residential Management Company?
A residential leasehold management agent manages the company and is normally appointed by the freeholder or the resident management company. The fees for day-to-day management are footed by the leaseholders as part of the service charges. If there is an occasion where major works are anticipated, an additional fee may be levied by the agent, and each leaseholder may have to account for a percentage of the total cost of such works.

What is a Residents’ Association?
In the case that leaseholders do not own a share of the freeholder, they may consider forming a Residents’ Association to liaise with the freeholder on such matters. Residents associations are made up of members from the different properties, and have responsibilities and rights, such as the entitlement to be consulted on certain matters such as the appointment of managing agents.

What are Service Charges and who pays them?
Service charges are paid by the leaseholder to the freeholder and usually cover the maintenance of communal areas. The lease normally sets out details of what can and cannot be charged by the freeholder. The proportion of the charge may be divided either equally among the number of flats, or by ground area.

The costs of services should be reasonable and in the event that leaseholders feel they are being unreasonably charged, there is the avenue for them to challenge perceived unreasonable service charges at the First-tier Tribunal (Property Chamber).

Why have Reserve Funds?
A reserve fund, also known as a sinking fund, is a fund from previous accumulated service charges for the payment of emergency repairs or other major works. Many leases allow the freeholder to collect sums in advance for such emergency repairs, or to alleviate the higher cost of future works. The sinking fund or reserve fund is usually capped at a certain amount – that is to say, once it has reached a certain figure – so once that has been attained the service charges for future years may be reduced.

Who has the Right to Manage?
Under the Commonhold and Leasehold Reform Act 2002, leaseholders can have the option of deciding who the management of their building should lie with. If at least half the leaseholders agree about the future managements of their building, then the freeholder cannot legally obstruct the process. That is to say, if leaseholders decide to take on the management of their building, or decide to instruct a managing agent in place of the freeholder instead they are legally entitled to do so if more than half of them agree.

What rights do Tenants of Leaseholders have?
While the block management agent will act in the best interest of their client – usually the freeholder or the leaseholders – they must treat any tenant of a leaseholder fairly and with courtesy. If in doubt, the block management agent should refer to the lease as a reference.

Buying a property? Some information for buyers

Buying a property can be like navigating a minefield. Here is some information you should know when considering a purchase.

Access
If the agent holds the keys, agency staff should accompany those who are viewing and anyone else requiring access, unless the seller gives authorisation to the contrary.

Advice
An agent will offer appropriate advice, explanations and assistance to all regardless of age, race, religious belief, gender, sexuality, ethnicity, or disability.

However, bear in mind an agent’s duty of care is to his client.

Agency Agreement
Types of agreement the agent may offer:

Sole agency which means that if contracts are exchanged with someone who your agent has introduced to the purchase, the agent will be entitled to the fee.

Sole selling rights which means that if contracts are exchanged with someone who your agent has introduced or was introduced by another agent or with someone you yourself introduced during the agency period the agent will be entitled to a fee.

Multi agency which means that you have instructed a number of agents and agreed that the agent who introduces the buyer to the purchase will be the one who is entitled to the fee. Note that multi agency fees are generally higher than for a sole agency.

Ready, willing and able which means that if someone is demonstrably ready, willing and able to purchase your property (even if an exchange of contracts does not occur) then the agent will be entitled to a fee.

Ensure that you understand:

The fee that will be charged and whether it is based on a sliding scale or a fixed amount.

How long the agreement runs for; how you can terminate it and with what period of notice is required.

Whether you will have any continuing liability to the agent for a fee if you do terminate the agreement.

The options open to you regarding the preparation of the Energy Performance Certificate (who will supply it and the cost).

The arrangements for boards and whether the agent will accompany all viewings or is expecting you to conduct some or all of them.

In particular you should:

Understand that you when you sign the agreement you are entering into a legally binding contract under which you may be liable for fees.

Ensure that you have read and understood the terms of the agreement and the commitments you have entered into. Do not feel pressured into simply signing it and be aware that if you sign the document in your home or at your place of work you are entitled to cancel it within 14 days.

Make sure that you receive copies of all relevant documents such as the agreement, terms of business and the final sales particulars after you have approved them in draft form.

Associated Services
You are not required to use any associated service which is offered by the agent. You are entitled to use your own financial adviser, legal representative and surveyor. Refusal of additional services should not prejudice any offers or viewings made through the agent.

If the buyer accepts services offered though the agent, the agent must inform the seller in writing of those services.

Buying a Flat
When buying a flat the estate agent should provide you with information such as the level of services charges. Further information can be found in the TPO Code of Practice for Residential Estate Agents and here.

Duty of Care
An agent will always work in the best interests of their client, that is to say the person who is paying for the estate agency services (usually the seller). An agent should treat all those involved in the proposed sale or purchase fairly and with courtesy. If the agent or one of his staff has any personal or business interest in the property, this must be divulged as soon as possible in writing.

Energy Performance Certificate
The agent should advise the seller about his obligations to obtain an energy performance certificate, prior to marketing begining.

Buyers can ask to see the energy performance certificate for the property.

Fees and Charges
An agent must inform you in writing, before you agree to use his service, what fees (including VAT) are payable and when they are due. Fees must be clear and transparent.

Financial Checks
An agent will ask sellers to provide proof of identity, as required by the Money Laundering Regulations 2007. Buyers will be asked for similar information, along with details of their funding for the proposed purchase at the point an offer is made.

Illegal / Criminal Activity
Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.

The Legal Representation
A licensed conveyancer or solicitor and will progress the formalities of the sale and determine with you the potential dates for exchanging contracts and completion.

The Mortgage Provider
If you require a mortgage to buy the property you may be dealing with a bank or building society, either directly or through an adviser. The agent is not allowed by law to give you any financial advice but he might refer you to an adviser with which he has links or which is a separate part of the same company. The agent will not have access to the records of the mortgage provider or adviser and has no control over the progress of any mortgage application.

Marketing
The agent must describe the property as accurately as possible and not misrepresent the details.

Agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 to describe a property truthfully and provide material information to allow potential buyers to make an informed transactional decision. Sales particulars should give a general description of the property and will highlight, for instance, the type of heating, double glazing installed, or appliances or furnishings that may be included in the sale. The agent will not have tested any facilities but if they are of particular importance to you it is wise to question the agent further and he can ascertain the relevant information from the seller on your behalf.

Negligence Claims
Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.

Offers
The agent must record all offers received and pass a written copy of the offer promptly to the seller. The agent must not conceal, misrepresent, withhold or delay communicating offers.

The agent should confirm your formal offer in writing to you and whether the seller has accepted that offer.

It is the seller who decides whether to accept an offer; to reject an offer; when to stop marketing the property after an offer has been made, and to whom to sell the property to and at what price. The agent can only guide the seller in this regard, it is not his decision. The agent is working for his client, the person selling the property.

Pre-Contract Deposits
As a general rule, estate agents should not take pre-contract deposits. However, in the case of new home sales, agents may take into account specific instructions from sellers. If a deposit is taken, then a written receipt must be given, and the circumstances under which the deposit is held and any interest accrued are refundable, must be clearly stated in writing. Unless the agent’s client has provided written authority, agents should not deduct any costs and charges from any client’s money. In Scotland, agents are not allowed to accept pre-contract deposits.

Role of the Estate Agent
He is instructed by the seller of the property but has a responsibility to treat any prospective buyer fairly.

The agent is required to act in the best interests of his client. The agent will ususally conduct a market appraisal, draft sales particulars, ensure an energy perfomance certificate is in place, agree a marketing strategy and undertake viewings, whilst receiving and passing on offers. The agent has no control over the legal process but will generally assist in checking on the progress of the purchase and, if agreed, in handing keys over on completion of the sale.

‘For Sale’ Boards
The agent must ask if the seller wants a ‘For Sale’ board to be displayed and ensure that only one board of the correct size is displayed for each property.

Boards must not be displayed in areas where they are not permitted.

Sale by Tender / Buyer Pays Fee
Sale by tender/buyer pays fee is an alternative commercial practice that has developed across the industry with a number of agencies employing it as a way of attracting business by offering sellers their agency services for reduced or zero cost fees. Under this approach the agent enters into an agreement with a seller to market a property whereby offers are submitted through a sealed bid/tender process.

Prospective buyers submit their offers to the agent having entered into an agreement to meet the agent’s fee liability which is over and above the agreed price for the property.

Sealed Bids
The process whereby the agent asks all potential buyers to make a ‘sealed’ offer to be received by a certain date and time. The agent will ‘open’ the offers at the designated time and advise the seller accordingly. The seller will then choose which offer to accept. The seller and the buyer retain the right to withdraw from the purchase thereafter.

Survey and Valuation
The surveyor or valuer will be engaged by the prospective buyer or their mortgage provider and will offer various types of surveys from a general valuation report to a structural survey. Unless the mortgage provider specifies otherwise it is the buyers choice as to the type of survey undertaken.

Terms of Business
All agents must give their clients written Terms of Business. The agent must clearly explain all fees and charges and tell you if any fee will be payable if you withdraw your instructions to sell the property.

Viewings
The agent must seek and act on the seller’s instructions about how viewings should be conducted.

Reasonable notice should be provided to the occupants of the property, prior to the viewing taking place.

If you can think of anything else we may have left out, leave a comment and let us know!

The Dispute Resolution Process

What is the purpose of The Property Ombudsman service?

It is a dispute resolution service between consumers and property agents. The advice offered by the property Ombudsman is free, impartial and independent.

Property agents are encouraged to sign up with the property Ombudsman for various reasons. A membership with it shows an agents’ professionalism in the sense that they are committed to the professional standards, thereby increasing the customer’s confidence in them.

In the event of a dispute, the ombudsman service saves both property agents and customers time and money through the cost of legal fees and legal procedure. The advice is free. And the fact that the infrequent aspects of disputes are taken up by the Ombudsman means that agents are free to concentrate on the real aspects of their business, in marketing, maintaining, renting and selling property.

Complaints Procedure
As one of the terms of membership, property agents have to have some formal complaints procedure in place for customers who may be dissatisfied with their work for some reason. This procedure must of course be in writing and should not only explain how customers can file a complaint, but also that if they are dissatisfied with how it has been investigated, they can take their complaint on to the Ombudsman. It goes without saying that this procedure must be made available to the complainant upon request.

The Code of Practice detailed by the terms of membership has specific timescales for complaints resolution that estate agents must adhere to. In the event of a dispute the Ombudsman will use these established timescales for reviewing if complaints have been dealt satisfactorily by the agent.

When a complaint is received by an agent, the person receiving it should make some form of acknowledgement so there is a record that the complaint has been noted at the property agent’s. It gives a “start date” from which resolution can begin.

If a complainant has been made either by telephone or in person, a record including important details such as the date and time must be noted. At this point the complainant should be provided with a copy of the in-house complaints procedure.

If the complaint has been made over the phone, this copy of the complaints procedure should be sent to them.

If the complainant has visited to make the complaint in person, a copy should be given to them immediately.

At this stage the emphasis is on recording issues formally, so that at a later stage there is no ambiguity over the nature of the complaint, or what was said by whom.

In both cases property agents should request that the complaint be put formally in writing, giving the name of the individual to whom the complaint should be addressed, so that the matter can be promptly investigated. An acknowledgement of the written complaint should be despatched within three days, while the timescale for an investigation and for providing a full response should be within fifteen working days.

If the latter timescale is unable to be met, then the complainant should be provided an estimate of how long it would take for the investigation to be complete.

It is a good practice that complainants have to file their complaints in writing. Not only does this provide a record of the specific issues they are seeking redress over, so that the property agents and – if necessary – the Ombudsman can investigate, it also is a way of ensuring that the complainants are clear themselves over the particular issues that have led them to complain in the first place. In addition, the work of having to formally file a complaint is a way of ensuring that the matter is one of signifcance.

What can count as a complaint?

A complaint could both be over a belief of inaction or malpractice. This means a consumer can make a complaint over something they believed a property agent should have done but didn’t, or one in which the action was wrong. For example, a tenant could make a complaint over property repairs that were promised but have yet to happen. Or the same tenant could make a complaint if repairs to a property were not up to standard.

Any complaint received should be treated seriously even if the property agent’s general feeling is that is has no weight. The complaint must be dealt with in accordance to the above procedures, and the agents must remember to follow procedure.

Property agents must remember to request that verbal complaints are put to them in writing.

A complaint should be dealt with by a senior member of staff who was not directly involved in the transaction. This ensures that there is no bias in the investigation. If the matter remains unresolved after fifteen days, another review should be sent up the chain to the Managing Director or Senior Partner or Principal. Similarly, this person should have had no previous involvement to ensure impartiality in the process.

But what about the case of practitioner firms, where one person runs the whole show? The sole practitioner must clearly state to the complainant and later the ombudsman (if the matter is subsequently referred) the level of their involvement in the matter to ensure that the level of impartiality is set out from the onset.

 

In some cases, property agents may wish to make some financial recompense towards the complainant to make restitution in the matter. The goodwill offer should always be appropriate to the matter, as an offer that is desultory only serves to inflame tensions.

The Ombudsman always encourages quick resolutions of disputes, because it is a positive process from which both parties can move forward. This does not mean, however, that the Ombudsman always encourages financial recompense. But in cases where complainants file a dispute because of work not done, or not up to standard, a goodwill offer to make good the matter may be a more healthy way forward for both parties, rather than be dragged into legal matters where the time and energy spent trying to apportion blame and responsibilty may outweigh the size of the claim.

If the complainant accepts the goodwill offer in full and final settlement of all complaints, the Ombudsman will consider the matter closed and settled.

However, if a complainant does not acceptable the goodwill offer, either because it is not appropriate to the size of the matter in dispute, because he or she feels that the property agent has not addressed the complaint fully, the matter can be referred to TPO. It some cases where both parties indicate a willingness to settle, but are finding difficulty in reaching a settlement, the Ombudsman may be able to mediate, subject to the approval of both parties. Neither party has to accept this, and in this instance the complaint will proceed to a formal review.

 

If – in the initial instance – TPO is contacted before complainant gives the property agent a chance to resolve their problem in accordance with their complaint procedures, TPO will refer them back to the agent to give them a chance to resolve the matter first.

After fifteen working days, the investigation should be complete and a final viewpoint letter should be issued to the complainant. The purpose of this final viewpoint letter is to provide a written statement which clearly expresses the property agent’s final view on all the complaints raised, and should include mention of any goodwill offers made.

Additionally, it should make the complainant aware that they may refer the matter to TPO if they feel the matter has not been resolved. The final viewpoint letter from the agent should also advise complainants of the timescale for bringing a complaint to TPO.

The final viewpoint letter is a first summative stage of the complaints process. And while it is a summary of the interactions between property agent and complainant, it can be said to form the starting point of TPO’s investigation, if the matter is passed up the chain. It would be easier for TPO, hence, to see that a final viewpoint letter has the date when the complainant has completed the in-house complaints procedure, and what the agent tried to do to clarify the issues considered under that procedure. It should also advise the complainant of subsequent options.

The final viewpoint letter should be headed as such, so it is clear to the complainant that they have completed the procedure, and if they wish to pursue the matter further, they have to go to TPO.

If fifteen days are not enough for the property agent to investigate the complaint, and if progress in the investigation has not been forthcoming, the Ombudsman can take up the complaint even without a final viewpoint letter.

 

The assumption so far in the above is that the complainant is a tenant and the dispute is against the property agent for work not done or work not done to an acceptable standard. But the fault may not necessarily always be entirely of the property agent. Sometimes a complainant, the tenant, may file a complaint but a dispute may have arisen directly or indirectly of certain actions, such as when the tenant has not paid fees such as rent. In cases where there are outstanding fees, the Ombudsman will make the complainant aware that legal action for recovery is possible and within the legal rights of the property agent, and the Ombudsman will suggest that the fee, or any uncontested part of it, is setlled on a “without prejudice” basis.

If property agents are considering legal action to recover fees under a contract, the Ombudsman may either escalate the case for review before the court date, or suspend the review pending the court decision. In the latter case, any subsequent review will only deal with aspects of the complaint not determined by the court, as the Ombudsman does not override and cannot override any matters dealt with by the court.

Property agents need to submit a copy of their company file, which contains certain documentation commonly used to review complaints is listed here. These are confidential and are not released to the complainants, unless the Ombudsman feels copies of relevant documents not previously seen by the complainants may be necessary for them to understand the reasons for his decision – in which case, it is legal for the complainant to see the relevant information.

Upon review, if the Ombudsman supports the complaint, property agents have 14 days to either accept, or appeal the decision. During this time property agents may appeal if they consider that there is a significant error in fact or new evidence that will have a material effect on the decision can be produced.

Both agents and complainants will be informed of the result of any further consideration.

The complainant is given 28 days in which to accept, not accept or make their own representation.

If the Ombudsman does not support the complaint, the complainant will first be contacted in writing about the proposed decision, and given 28 days to produce significant new evidence with bearing on the case or show there is a significant error in fact in the judgement.

The Ombudsman will consider any further representation and if the complainant accepts the proposed decision it becomes legally binding. But if the complainant does not respond to the proposed decision any award will then lapse and the case will be closed Nevertheless, complainants will be free to pursue their complaint elsewhere, but, the Ombudsman’s decision will no longer valid and cannot be used to support any further action.

For those who are new to the property ombudsman service, it is akin to a small  claims tribunal for matters around property.

The property ombudsman aims to mediate between smaller disputes outside of the court, thereby resolving them more quickly and freeing up court time.

Even though the property Ombudsman may make recommendations for awards up to twenty-five thousand pounds, the  average compensation figures were around three to six hundred pounds.