Author: Antony Antoniou

The latest index shows house prices at the end of December were 6.0 per cent higher than in the same month a year earlier.

But the month-on-month price increase of just 0.2 per cent was significantly down from the 1.0 rise seen in November, and echoes what agents have seen on the ground according to former RICS residential faculty head Jeremy Leaf.

“The pace of house price rises started to slow in December, which is exactly what we found in our offices, as home movers were deterred by further lockdown restrictions and seasonal distractions” he says.

“However, we recorded very few abortive sales, other than when chains had broken down or price renegotiations in response to reduced activity. Therefore, looking forward we expect the pattern to be repeated and the overwhelming majority of transactions to proceed to completion, followed by more balance between supply and demand as rollout of the vaccinations hopefully accelerates.”

Knight Frank’s Tom Bill – head of the agency’s residential research team – says this supply-demand equilibrium may continue for some months thanks to the latest national lockdown having an effect.

“Although we expect prices to be largely flat over the course of 2021, there may be a dip in the second quarter. Not only is this due to the end of the stamp duty holiday, but the fact a third national lockdown means some sellers may be inclined to hold off until spring. Any supply glut would put downwards pressure on prices even if normality had begun to return through the vaccine rollout” according to Bill.

Halifax managing director Russell Galley says: “2020 was a tale of two distinct halves for the housing market. Following a strong start, the first half was dominated by the restrictions on movement due to Covid-19, and prices were subsequently down 0.5 per cent at mid-year as the market effectively ground to a halt.

“However, when the market reopened, prices soared as a result of pent-up demand, a desire amongst buyers for greater space and the time-limited incentive of the stamp duty holiday.

“In the near-term, and with mortgage approvals still sitting at a 13-year high, there may be enough residual strength in the market to sustain prices up to the deadline for the stamp duty holiday and the scaling back of Help to Buy at the end of March.

“However, with the pace of the UK’s economic recovery expected to be constrained by the renewed national lockdown, and unemployment widely predicted to rise in the coming months, downward pressure on house prices remains likely as we move through 2021.”

The Leasehold Group of Companies – formerly led by the late Louie Burns – has described the reforms as “window dressing” and has called for timescales and details of how changes will be implemented.

The government announced proposed reforms to the leasehold system intended to help leaseholders to own their homes, while reducing the costs involved and making the enfranchisement process clearer and fairer.

But The Leasehold Group says the proposals lack detail and risk causing greater confusion to existing and potential leaseholders.

Anna Bailey, the group’s founder, says: “Having been at the forefront of this sector and working solely for leaseholders for nearly 20 years, I am genuinely concerned that the reforms proposed will in reality change very little for millions of leaseholders and are nothing more than window dressing. We – and the clients for whom we are working – urgently need more clarification on how, and crucially when, the reforms will actually be implemented.”

And the Association of Leasehold Enfranchisement Practitioners (ALEP) says it wants clarity and further information regarding timescales, technical legal details and how changes will work in practice.

ALEP director Mark Chick says the proposed reform show commitment from government. But he adds: “The measures … have thrown up more questions than they’ve answered for professionals working in enfranchisement.”

ALEP wants to know when the first draft of this legislation will be released and more detail on what these changes will actually look like in practice.

“As this is just the first part of a ‘seminal two-part reforming legislation’ we are calling for more detailed information on what the next steps are and what they will include” says Chick.

“Whilst we appreciate that an online calculator may help simplify matters, ALEP and its members have real concerns about how this will actually work in practice and wonder if this measure takes into account the complexities of marriage value calculations and the need to ensure that there is fairness for both leaseholders and freeholders” he continues.

Meanwhile solicitors’ leaders are warning that for commonhold ownership to flourish, there must be incentives for developers, lenders and buyers.

“Leasehold reform is a complex, important and necessary task with many different interests at stake” says David Greene, president of the Law Society of England and Wales.

“The reforms announced by the government should deliver real benefits for current leasehold homeowners and future buyers, many of whom are being failed by the current system.

“They should help people avoid expensive ground rents and make it easier for them to buy the freehold of their home.”

Commonhold is a form of ownership for multi-occupancy developments where each unit holder owns the freehold of their home, and a commonhold or residents’ association owns and manages the common parts of the property.

Although the commonhold system should give flat owners more control over the management of their development than leasehold does, very few commonholds have been created since they were introduced in 2004.

“If commonhold is to develop as an alternative to leasehold, then the government must encourage its creation on a much wider basis,” adds David Greene.

“Incentives will need to be offered to developers, lenders and buyers if this is to happen.”

Under the current law freeholders can increase the amount of ground rent with little or no benefit seen to those faced with extra charges.

Today’s changes will mean that any leaseholder who chooses to extend their lease on their home will no longer pay any ground rent to the freeholder, enabling those who dream of fully owning their home to do so without cumbersome bureaucracy and additional, unnecessary and unfair expenses

For some leaseholders, these changes could save them thousands, to tens of thousands of pounds says the government.

Under current rules, leaseholders of houses can only extend their lease once for 50 years with a ground rent. This compares to leaseholders of flats who can extend as often as they wish at a zero ‘peppercorn’ ground rent for 90 years.

Today’s changes mean both house and flat leaseholders will now be able to extend their lease to a new standard 990 years with a ground rent at zero.

A cap will also be introduced on ground rent payable when a leaseholder chooses to either extend their lease or become the freeholder.

An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.

The government is abolishing prohibitive costs like ‘marriage value’ and set the calculation rates to ensure this is fairer, cheaper and more transparent. An online calculator will be introduced to make it simpler for leaseholders to find out how much it will cost them to buy their freehold or extend their lease.

The government has previously committed to restricting ground rents to zero for new leases to make the process fairer for leaseholders.

This will also now apply to retirement leasehold properties – homes built specifically for older people – so purchasers of these homes have the same rights as other homeowners and are protected from uncertain and so-called rip-off practices.

Housing  Secretary  Robert  Jenrick says :“Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive.

“We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.

“These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.”

“Our research in 2018 found that 46 per cent of leasehold house owners were unaware of the escalating ground rent when they purchased their property.

“Over one million households in the UK are sold through a leasehold, and this new legislation will go a long way to help thousands of homeowners caught in a leasehold trap.

“However, while we welcome the government’s initiative to reduce ground rents to zero for all new retirement properties, we would argue this needs to be extended to all retirement properties to create a level playing field. Event fees remain a hugely contentious issue which many consumers still don’t understand so we need as much clarity and transparency as possible.”

Firstly, a petition seeking an extension has now gathered over 40,000 signatures. You can sign it here. 

The government says in response that it “considers the views it receives very carefully” suggesting there’s still good reason for agents, suppliers and the industry at large to sign the petition.

Secondly, agents are renewing their calls for the extension in a bid to stop buyers being disappointed.

“The new lockdown will have some impact on surveyors, removals firms etc and in the circumstances, it would be prudent for the Chancellor to reconsider the stamp duty deadline. Those who have moved heaven and earth to meet the deadline should not now be penalised if they miss it through no fault of their own” explains London agent Jeremy Leaf.

And George Franks, co-founder of London-based agency Radstock Property, comments: “Extending the deadline by at least another month to reflect the new national lockdown seems like the right thing to do in the current circumstances and I’m sure it’s on Rishi Sunak’s agenda. The property market is providing vital fuel for the economy and the Treasury will want to ensure that continues during the potentially challenging months ahead.”

Franks adds: “Extending the Stamp Duty holiday is a way for the Government to give people something to cheer about when there’s so little to cheer about, as public sentiment and the property market are closely related.”

Meanwhile Andrew Montlake, managing director at mortgage broker Coreco, says he wouldn’t be surprised if Sunak accepts there’s a need for an extension.

“Lenders, valuers and conveyancers are already experiencing bottlenecks and delays given the sheer amount of applications going through, and the administrative upheaval caused by the latest lockdown will only serve to accentuate them. We would not be surprised if the Treasury makes an announcement this week about extending the stamp duty deadline to keep demand alive and give the property industry some much needed wiggle room” suggests Montlake.

And David Hannah, founder and principal consultant of Cornerstone Tax – and a long-time campaigner for stamp duty reform – says: “The most preferable option would be a phasing out of the holiday, to avoid those who are currently in the process of purchasing their properties, essentially being thrown off a cliff-edge.

“Especially now that the country is being plunged back into another full lockdown, more must be done to help people get on the property ladder and give the market some security in what will be a very turbulent few months.”

In a response to the petition before Christmas, the government appeared on the one hand to rule out an extension but then admitted the issue was being kept under review – and that was before the current lockdown, set to last until late February at least.

The government’s full response to the petition in December was as follows:

“The SDLT holiday was designed to be a temporary relief to stimulate market activity and support jobs that rely on the property market. The Government does not plan to extend this temporary relief.

“The COVID-19 pandemic and subsequent [spring] lockdown caused uncertainty for those buying and selling residential property and property transactions fell by as much as 50 per cent during the first national lockdown. 

“To stimulate immediate momentum in the property market and to support the jobs of people whose employment relied on custom from the property industry, the Government decided to introduce a temporary Stamp Duty Land Tax (SDLT) relief. This relief increased the starting threshold of residential SDLT from £125,000 to £500,000 from the 8 July 2020 until 31 March 2021. 

“Since the relief was introduced, transactions have increased and seasonally adjusted data shows that in October 2020, transactions were 8% higher than October 2019.

“As the relief was to provide an immediate stimulus to the property market, the Government does not plan to extend this relief. SDLT is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the Government provides. 

“The Government is committed to supporting home ownership and helping people get on and move up the housing ladder. When the SDLT Holiday ends, the Government will maintain a SDLT relief for first time buyers which increases the starting threshold of residential SDLT to £300,000 for first-time buyers that purchase a property below £500,000. In addition, a new Help to Buy scheme will be introduced from 1 April 2021. This scheme will run until March 2023.

“All tax policy is kept under review and the Government considers the views it receives carefully as part of that process.”

The UK has been part of an overall data protection regime which embraces the entirety of the European Economic Area – the EEA consists of the member states of the European Union along with the three countries of the European Free Trade Association, which are Iceland, Liechtenstein and Norway.

David Smith, partner at JMW Solicitors, says that if a consequence of Brexit the UK also leaves the EEA, then businesses which process the personal data of EEA nationals – which may well include estate and lettings agencies – will no longer be able to do so easily.

“For agents who have clients or third parties such as tenants or property buyers coming from elsewhere in the EEA the obligations will be a little different” says Smith.

“Firstly, they will need to comply with the General Data Protection Regulations (GDPR). Of course, as the UK is currently within the GDPR all agents should already be GDPR compliant and this will not be a significant burden initially. However, the Prime Minister has already suggested the UK will create its own data protection regime and so it is possible agents will find themselves having to comply with a UK regime as well as GDPR” he adds.

Smith goes on to say that compliance with GDPR imposes “an absolute requirement on business to have a representative within the EEA if they are processing personal data from EEA nationals.”

Consequently, he says that this means if a UK estate or letting agency is processing personal data from people such as buyers or landlords in any EEA country, they must either have an office in an EEA country or have entered into a relationship with a person or organisation established in the EEA to represent them for the purposes of the GDPR.

Smith says it is still possible that this issue could be resolved in the discussions to sort out the details of the Brexit deal.

There may be a resolution of this problem in the weeks and months to come. However, it is possible that such a resolution may not be reached.

Therefore Smith advises that “it would be sensible for agents, especially those with substantial EEA client bases, to take steps to prepare for this now.”

Foundation Home Loans – an intermediary-only lender – says conveyancing solicitors can place the insurance policy on risk at completion in lieu of local authority and or other searches.

In a statement, the lender says: “Local authority searches normally are a critical part of the transaction. They give information on the land on which the property being mortgaged is built and the immediate surrounding area/location. Without these searches, the owner could be liable for future costs and legal challenges on matters, for example, such as public rights of way, planning permission and building control works including extensions, and in extreme cases could mean that the value of the property is affected negatively.

“Recently, local authorities have struggled to deliver the results of local authority searches due to the very high demand for local authority searches, driven by both staffing issues caused by Covid-19 lockdown and the flood of purchases being transacted prior to the stamp duty reduced rates deadline of March 31 2021.

“Some have been taking more than 40 days to produce the search results, which means the process of buying a property has become very lengthy for many buyers.

“We continue to simplify the mortgage process wherever possible, to support you in getting as many … clients as possible to completion before the March 31 stamp duty reduced rates deadline.”

Earlier this week a trade body called on Housing Secretary Robert Jenrick to intervene over the growing problem of delays in councils providing search information to buyers and conveyancers.

The Council of Property Search Organisations (CoPSO) says more than 35 per cent of local authorities are now taking more than 20 working days to process search requests – and in many cases the delay is for 30 days “or significantly more.”

CoPSO claims that many of the delays – even before the latest lockdown – were down to insufficient central government resources being allocated to councils suffering staff shortages and slower working processes for staff advised not to go to offices.

The measures announced so far are:

– One-off top-up grants for retail, hospitality and leisure businesses of up to £9,000 per business premises, broken down as £4,000 for businesses with a rateable value of £15,000 or under; £6,000 for businesses with a rateable value between £15,000 and £51,000; and £9,000 for businesses with a rateable value of over £51,000. These grants are being offered on a per business property basis;

– The one-off top-up grants are in addition to the ongoing grants of up to £3,000 a month that some businesses can already claim;

– Today’s announcement also involves an additional £594m fund available to support other sectors;

– Extension to Self-Employed Income Support Scheme, with details yet to come;

– Additional funding for devolved administrations to help businesses (£375m for Scottish Government, £227m for the Welsh Govrrnment, and £127m for the Northern Ireland Executive);

– Confirmation of the furlough scheme being extended until the end of April, and the 100 per cent business rates relief as already announced for retail, hospitality and leisure businesses.

Chancellor Rishi Sunak says: “The new strain of the virus presents us all with a huge challenge – and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.

“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the spring.

“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”

The Council of Property Search Organisations (CoPSO) says more than 35 per cent of local authorities are now taking more than 20 working days to process search requests – and in many cases the delay is for 30 days “or significantly more.”

CoPSO chairman James Sherwood-Rogers says: “With the expiry of the stamp duty holiday at the end of March looming large, the progress of home purchase transactions is becoming increasingly time critical.

“It is vital that the current delays in procuring searches at an increasing number of local authorities is addressed urgently; and we have no doubt that this needs attention at central government. Responsibility for the operation of the housing market, and for local authorities come together with Robert Jenrick and this is the reason we have approached him for his direct intervention.”

The trade body says it fully understanding that a hyperactive property market and the challenging conditions surrounding Coronavirus make it difficult for councils.

“We have communicated with many of the authorities that have substantial backlogs and delayed turnaround times, and the feedback from the overwhelming majority is that they are under-resourced. With the expiry of the stamp duty holiday being primarily responsible for the overactive property market, and the Chancellor stubbornly refusing to extend the deadline, it behoves central Government to provide additional resource to local government to address the problem of search delays” insists Sherwood-Rogers.

CoPSO says it’s willing to help Jenrick and his Ministry of Housing, Communities and Local Government to identify those authorities which urgently need additional resources.

Meanwhile two other industry bodies – The Guild of Property Professionals and The Bold Legal Group – have called on agents, conveyancers and others in the transaction process to “work together, constructively and harmoniously.”

The organisations’ chief executives – Iain McKenzie from the Guild and Rob Hailstone from the BLG – says both agent and conveyancer roles are difficult.

Hailstone comments: “In most cases, the client, the agent and the conveyancer have one goal in mind, a safe, stress free, quick transaction. Pulling together will achieve all of these much easier than pulling each other apart.”

McKenzie adds that agents and conveyancers should agree on how best to communicate with each other and set out who will be responsible for chasing whom on each of the aspect pertaining to the property transaction.

“There needs to open communication and regular meetings between the agent and conveyancer, where they can discuss and update each other on the status of the various transactions in the process of being completed. It is important to have a course of action in place and good working relationship to ensure the highest number of possible transactions are delivered before the [stamp duty holiday] deadline at the end of March” he says.

The new areas are in the Midlands, North East, parts of the North West and parts of the South West.

For those not previously operating under Tier 4, or those who have been away during the festive period, here are the official government guidelines for agents and those selling new-build homes.

Tier 4 -Estate Agents

Estate agency offices can remain open to the public in all 4 tiers. Estate agents agents should inform customers and their own staff about their Covid-19 procedures, so that they are safe throughout the sales process.

• Agents should ask whether any party is showing symptoms or has been asked to self-isolate before going ahead with any viewing, or visits to offices.
• Agents should inform visitors to their offices of the need to wear face coverings. Agents should ensure their offices are ‘Covid secure’ and that they take appropriate measures to prevent the spread of the disease. See guidance on making the workplace secure. Agents should wear face coverings while in close face-to-face contact with visitors and where other protective measures are unlikely to be in place, such as in clients’ homes during a viewing. See guidance on face coverings.
• Agents should strongly encourage clients to view properties virtually in the first instance and then only physically inspect properties which they have a strong interest in.
• Where they do not accompany the visit, they should make sure that both buyers and sellers clearly understand how the viewing should be conducted safely.
• Agents should avoid driving clients to appointments. Advise clients to find alternative means of travel including public transport, walking, cycling or using their own vehicle. If this is not possible, follow the latest guidance on travelling safely with others including the use of a face mask and cleaning the vehicle regularly.
• All parties viewing a property should wash their hands with soap and water (or hand sanitiser if not available) immediately after entering the properties, with internal doors opened and surfaces having been wiped down before they enter. Separate towels or paper towels should be used if possible and washed or disposed of safely after use.
• Agents should do what they can to promote flexibility when arranging move dates, for example advising clients to ensure contracts have explicit terms to manage the timing risks presented by coronavirus.
• Agents should work with their clients and other agents to broker a new date to move where sales are due to complete and one of the parties falls ill with coronavirus or has to self-isolate.
• Agents should ensure that any keys are appropriately cleaned before handover.
• Agents should ask clients whether they have returned to the UK from one of the countries not on the exception list. If clients have returned from a country on the quarantine list, agents can continue to progress their home move virtually until the quarantine period is over. See guidance on returning to the UK.