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More transparency and communication needed in property leasehold sector
Property managers should not be subject to more formal regulations by the government but there needs to be more transparency and communication in the leasehold market, it is claimed. The Competition and Markets Authority (CMA) has, however, made a number of recommendations as a result of its market study into the residential property management services sector in England and Wales. It had consulted extensively with consumer groups, leaseholders, the industry and government during the course of the study and found that overall while the market works well for many leaseholders, some have experienced significant problems in a sector where total annual service charges are estimated at £2.5 to £3.5 billion. The issues identified include leaseholder frustration at a lack of control over the appointment of property managers, high charges for services arranged by property managers or poor standards of service. It also found leaseholders suffered unexpected costs and were being charged for works they consider unnecessary, poor communication and transparency between property managers and leaseholders, and difficulties in getting redress. The CMA has also identified some concerns about prospective purchasers’ understanding of leasehold, and their obligations and service charge liabilities for leasehold flats. In light of its findings and on-going developments in the market, the CMA has made a number of detailed recommendations aimed at improving prospective purchasers’ awareness of leaseholders’ obligations. It also wants to improve disclosure, transparency and communication between property managers and leaseholders and leaseholders’ access to appropriate forms of redress. It says that these recommendations will make leaseholders better informed about the responsibilities and performance of property managers, while greater transparency will increase pressures on property managers and landlords to take account of leaseholder interests. They will also provide improved mechanisms for dispute resolution, should issues arise that require action. The CMA is also recommending changes to legislation affecting rights of consultation relating to major works, as well as supplementing the existing Right to Manage legislation to enable leaseholders, where there is a majority in favour, to require the landlord to re-tender the property management of their block. The CMA is not recommending that property managers should be subject to more formal regulation by government. It says that for many the market works reasonably well, and satisfaction levels are particularly high where leaseholders have exercised their Right to Manage. It adds that existing legislation provides significant protections for many leaseholders, and the sector has engaged constructively with the CMA during the course of its study, recognising that there are improvements to be made and showing a willingness to address the issues that have been identified. ‘Many property managers provide a good service to leaseholders, but protection against the worst failures by property managers is vital because when problems do occur they have a major impact on leaseholders,’ said Rachel Merelie, the senior director at the CMA who led the study. ‘We are pleased that within the sector there is a consensus that change is needed and a genuine willingness to be part of that change. This is evidenced… Continue reading
Political uncertainty over 2015 election hits central London prime property market
Demand in the prime central London residential property market has become more restrained against a backdrop of heightened uncertainty due to next year’s general election, according to a new analysis. Prices in this sector fell by 0.2% in November, which was the first drop since October 2010 and meant annual growth eased to 6.1%, the report from real estate firm Knight Frank shows. Discounting a minor dip in the second half of 2010 due to concerns over the euro zone, November marked the end of a run of growth that lasted five and a half years, during which time prices have increased by 73%. According to Tom Bill, Knight Frank’s head of London residential research, it is difficult to rank individual reasons for the decline in order of importance, but anecdotally they appear to include the looming UK general election, the proposals for a mansion tax and the impact of capital gains tax reform for non-residents. ‘The conclusion must be that prices have softened in prime central London due to the magnitude of the cumulative uncertainty rather than the quantifiable extent of the risks. However, short term or domestic risks don’t obscure London’s wider appeal,’ he said. ‘Whatever happens in 2015, for example, London will retain a competitive advantage versus New York, where residents are taxed on their global income. Neither should buyers overlook the long-term potential for price performance of prime central London property which, as the graph above shows, has been exceptionally strong through past elections,’ he added. The report also shows that price declines in November included a 2.3% fall in Notting Hill, due to weaker demand in the £5 million to £10 million price bracket, a family house market that is more reliant on domestic demand than other areas of central London. Elsewhere, prices in South Kensington fell 1.2%. Bill explained that although more buyers are adopting a wait and see approach to pricing, the most in-demand and well-priced properties are selling quickly. There were declines of less than 1% in Kensington, Islington and Marylebone, while prices were flat in the three golden postcodes of Belgravia, Knightsbridge and Mayfair. Continue reading
New home sales in Australia on the up again, latest HIA data shows
New home sales in Australia experienced a modest rise in October after remaining flat the month before, according to the latest report from the Housing Industry Association (HIA). Total seasonally adjusted new home sales increased by 3% and growth was driven by a growth in the sale of detached houses in Victoria and Western Australia. HIA chief economist Harley Dale pointed out that after a relatively sharp decline of 5.7% in July, driven by both detached houses and multi-units, total new home sales have mounted a modest recovery ‘Sales are still off their cyclical peak reached back in April this year, but the overall volume of new home sales is still at an elevated level. That augurs well for healthy new home construction activity persisting into 2015,’ he explained. ‘Australia is on track to commence a record number of homes this year. While undesirable lags in the availability of Australian Bureau of Statistics data prevent confirmation of this outcome until well into next year, the fact is that 2014 is drawing to a close,’ he said. ‘We now want to be seeing evidence pointing to a healthy prognosis for new home building activity in 2015. In this regard we have positive signals coming from three key leading indicators. HIA new home sales and ABS building approvals are past their peaks but remain at elevated levels. Lending for new housing is still trending higher and doesn’t appear to have peaked yet,’ he added. A breakdown of the figures show that detached house sales increased by 4.7% in Victoria and by 24.8% in Western Australia but fell by 3% in New South Wales and were down by 7.8% in Queensland and 1.7% in South Australia. Over the three months to October 2014 detached house sales increased by 3.7% in New South Wales, by 1.2% in Queensland and by 1.7% in Western Australia. They fell by 13.4% in Victoria and by 6.3% in South Australia. Continue reading
