New Homes Quality Code – have you updated your reservation forms?

New Homes Quality Code title image

Is the New Homes Quality Board a new concept?

The New Homes Quality Board (NHQB) was constituted as a legal entity in January 2021. But it was 2022 that saw the NHQB tasked to “put in place a New Homes Ombudsman Service and develop a new industry code of practice – the New Homes Quality Code“. 

Some readers will be aware that this type of body isn’t unique to our industry and be familiar with previous codes created to ensure building quality and growth in industry standards. To name just two; there’s the Consumer Code for Home Builders, established in April 2010 and the Consumer Code for New Homes.

I mention these to provide a distinction to the NHQB. It’s a new government backed framework to oversee reforms in two areas: The build quality of new homes, and the customer service provided by developers.

Created under the direction of The Building Safety Act 2022 (BSA 2022) the NHQB also established a New Homes Ombudsman Service and a new industry code of practice called the New Homes Quality Code (NHQC). Each one fulfilling a demand of the Building Safety Act 2022.

Is the NHQB compulsory?

The Building Safety Act requires that developers join an approved scheme. The New Homes Quality Board is currently the only approved scheme. Membership to the board demonstrates alignment to the Act’s values, standards of build quality as provided by the Act, as well as upholding the required customer service standards.

Finally, they are demonstrating to their customers that they are accountable to an industry body for their standards, values and build quality. This secures trust with the buyer and shows the integrity of the developer. Most importantly, it ensures high safety and operational standards for developments across the UK.

Obtaining membership to the NHQB requires an initial application followed by an additional nine steps which are listed below: 

New Homes Quality Code - application steps
https://developers.nhqb.org.uk/developers.html

Although the NHQB only launched in 2022, there are currently 94 active developers listed on the register and 316 additional developers with pending applications at this time (Jan 23). Being registered as a member of the NHQB communicates to new home buyers that the UK government’s standards have been met without the need for thorough personal investigation when a buyer may not have the knowledge or expertise to investigate.

Is the NHQB a membership or a governing body?

The NHQB is a membership based organisation with memberships divided into 15 levels of fee. These tiers range from £500 for a dormant company to £220,000 for a Tier 1 developer. Step two of the onboarding process shown in the image above, is invoicing / payment. Once a developer is a member, the board will hold the members to the NHQB terms of membership in accordance with the BSA 2022.

The NHQB has established the New Homes Ombudsman Service (fulfilling the demand of the Building Safety Act 2022). This ombudsman service ‘exists to help customers resolve issues with their new homes, which the registered developer has been unable or unwilling to fix.’ – nhos.org.uk

The NHOS will ensure adherence to The Building Safety Act, making membership to the NHQB less of a badge of quality assurance but rather, alignment to compulsory industry standards. This agreement upholds a national, governmental standard, managed by an independent board.

As a member, developers can face corrective or disciplinary action and even fines for breaching the New Homes Quality Code.

What are the 10 Guiding Principles?

The code has been created by the NHQB in two parts. This first part establishes the ten core principles which developers agree to apply to their business and their dealings with customers.
 
  • Fairness
  • Safety
  • Quality
  • Service
  • Responsiveness
  • Transparency
  • Independence
  • Inclusivity
  • Security
  • Compliance
New Homes Quality Code Guiding Principles
https://developers.nhqb.org.uk/downloads.html

What are the 4 practical steps laid out in the code?

  • Step 1: Selling a new home
  • Step 2: Legal documents, information, inspection and completion
  • Step 3: After-sales service, complaints and the New Homes Ombudsman
  • Step 4: Solvency, legal rights and jurisdiction

What happens if a New Home Reservation form doesn't comply with NHQB?

In addition to buying a new home where the build is complete, a customer may want to reserve a plot. Plots can be reserved prior to construction and are referred to as an early bird or plot-option arrangement. Either way, if a buyer wants to reserve a new home, both parties must enter into a formal reservation agreement. There are 4 key dictates given by the NHQB about the reservation agreements:

  1.  Neither party should enter into a reservation agreement until they have the relevant facts
  2. The developer is responsible for ensuring that the terms are clear, fair and written in plain language. The developer is accountable here for keeping to all relevant legislation.
  3.  An agreement must be signed by both parties, either electronically or in person and the customer must be given a copy. 
  4.  The developer must include all 16 details in their reservation agreement terms provided in section 2.2 of the Consumer Code. These details reflect what the NHQB considers to be clear, fair and in plain language.

The NHQB Discipline & Sanctions Committee investigates any reported breaches of the Code or other disciplinary offences.

If the required standards are not met by the registered developer, or if they do not act in line with the New Homes Ombudsman’s decisions, they may be referred to the NHQB Discipline & Sanctions committee to determine if any corrective action, disciplinary measures are to be applied. These range from retraining, fines being levied, and in severe cases, removal from the Register of Developers.

What is the best way to ensure your forms are compliant?

Developers need to make sure they use forms which are compliant with the NHQB terms. New Homes Reservation forms must utilise all of the specific language, correct details and terminology.

Finch provide an NHQB compliant New Homes Reservation Form. Finch’s smart forms provide the relevant information required by the NHQB to the relevant parties, at the correct time. The Finch New Homes Reservation forms can be quickly adapted to each developer, ensuring that the core elements for compliance remain at the heart of the form, whilst including any additional information required by the developer.

Property Particulars – Property Marketing Compliance

Property Particulars

Marketing materials regulation & approval

Our previous article (Property Information Forms) provided an overview of the content of the TA6 form, and discussed how it could be divided into two distinct sections completed at different times. The first section focused on the information needed to market a property, and the second the additional information required to complete a sale.

This article is a continuation, exploring Property Particulars and the importance of ensuring property owners approve their content before they are published. 

Property Particulars refer to the materials agents produce to advertise a property for sale or rent.

They identify the specific key characteristics about a property which are most likely to affect the interest of a purchaser. They will range from (among other attributes) the number of bathrooms, garden dimensions, Energy Performance Certificates, council tax bands and tenure.   
 

Prior to 1st October 2013, Property Particulars were regulated by the Property Misdescriptions act 1991. Following it’s repeal, consumers are now protected by the Consumers Protection from Unfair Trading Regulations – May 2008 and businesses are protected by The Business Protection from Misleading Marketing Regulations – May 2008.

What’s the difference between Property Particulars and the TA6?

Property particulars normally consist of a written brochure, text and photography for use on websites and property portals and where appropriate video tours and drone footage. Their layout and content will vary from agent to agent.

The property information from or TA6 is a much more in-depth document historically requested once a sale has been agreed. It provides the buyer with additional information to help them to decide if they wish to continue with the purchase.  The content will be consistent and is administered by the Law Society.

Are property particulars regulated?

In terms of overall content and layout no its very much down to the individual agent and their customer how they want to present a property. However, estate agents have to adhere to consumer protection regulations meaning trading standards can hold them accountable if they produce property particulars that are judged to be misleading. In addition, agents must belong to an approved redress scheme such as the The Property Ombudsman who have specific standards that members must comply with.   

What are the potential consequences of inaccurate property particulars?

Inappropriate viewings and the fall through of a sale in the first instance. In severe cases potential charges for misrepresentation under the consumer protection regulations.

Should property particulars be approved by the owner?

Yes it’s best practice and also a requirement for those agents registered with the Property Ombudsman  

When are property particulars produced and can they be circulated to prospective buyers/tenants before they are approved by the owner?

It’s normally one of the first tasks an agent will complete once they have been formally instructed, however some agents may produce a draft as part of their post market appraisal sales proposal.

If they are to be circulated prior to approval, they should clearly state that is the case using a statement such as “draft” or “Subject to approval”.  

Can other agreements be made alongside signing off particulars?

Yes, there is no reason why an approval request could not include terms and conditions not related to the property particulars.

Can Finch help agents with the property particulars approval process?

Yes, Finch provides a flexible digital process that allows agents to securely present a consolidated marketing pack to their customers for comment and approval.

Property Information Form: How upfront information can avoid fall throughs  

Particulars

Is a Property Information Form a resurrected Home Information Pack?

For those who have been selling and letting residential properties over the past couple of decades, they will remember the Home Information Packs (HIPs), sometimes called a sellers pack. These were created during the coalition government and were formally repealed by the Localism Act 2011 on the 15th January 2012. One element of the HIP has continued on to current day though, as the Minimum Energy Efficiency Standards which continue to be developed within the now required Energy Performance Certificates (EPC’s).

HIPs were a legal requirement regulated by a governing body and were to be completed prior to a property being marketed. Property Information Forms are a set of informative data points which will likely be requested by a solicitor for a buyer to complete a sale. These data points include information on boundaries, commodities and neighbourly situations. And whilst the information is no longer a legal requirement and is therefore distinct from HIPs, it is information which will likely derail a sale should it remain absent.

Property Information Form timeline

What is a Property Information Form?

A Property Information Form (PIF) is one of eight transaction forms known as TA Forms. The form relevant to freehold property sales is the TA6 (or transaction Form 6). These forms have been created by The Law Society and cover multiple purchase options. TA6 is designed for the vendor to provide detailed information about the property to the buyer

TA6 (PIF as we will continue to call them) includes the following information:

  1. Property boundaries
  2. Disputes and complaints
  3. Notices and proposals
  4. Alterations, planning and building control
  5. Guarantees and warranties
  6. Insurance
  7. Environmental matters
  8. Rights and informal arrangements
  9. Parking
  10. Additional charges
  11. Occupiers
  12. Services
  13. Connections to utilities and services
  14. Transaction Information

This is a large body of work for a vendor. A PIF is a significant challenge for any agent encouraging their vendor to complete the form prior to marketing the property. A typical road-block here will be the vendors desire to have a deal secured prior to addressing a full PIF. There are however some must haves for the marketing materials.

The good news for agents is that this form in contrast to the HIP, is divisible. If the information gathered by a PIF isn’t provided at the point of marketing the property, it will simply be requested by the buyers solicitor later. There is information which should be used to hook the interest of a potential buyer and information which only becomes relevant to the buyer at offer and sale progression. For example, at the initial point of interest a buyer is likely to want to know whether or not the property is a listed building, they may also be interested in its energy efficiency rating or in its boundaries, but less concerned with information such as the absence of historical fishing rights on the land (of their 1980’s urban mid-terrace)… section 8.5. The specific peculiarities of a property can come later! 

Is there a Property Information Form for both Sales and Lettings?

There are a number of different transaction forms provided by The Law Society in addition to a PIF:

  • TA4 – Required commonhold information
  • TA6 – Property information form (likely to be needed for every purchase)
  • TA7 – Leasehold information form
  • TA8 – New home information form
  • TA9 – Commonhold information form
  • TA10 – Fittings and content form
  • TA13 – Completion information and requisitions on title
  • TA15 – Commonhold information request

All of these forms apply to the sales conveyance process.

In lettings a Property Information Questionnaire (PIQ) serves a similar purpose to a PIF. However, whilst the absence of a PIF during the sale process will likely halt the sale completely, a missing PIQ would likely have no effect on the tenancy proceeding. It is possible, that a tenant facing adverse or mis-sold conditions, might suggest a breach of section 10.8 of the Unfair Commercial Practices Directive. Below are two helpful excerpts from SHELTER and GOV.UK showing that a high degree of clarity about a property (sold or let) is essential.

Property Information Form legislation

Who's responsible/ accountable for the details provided in a Property Information Form?

The vendor is responsible for recording the information correctly but assistance is offered through many avenues, not least of all by The Law Society. The vendor is the one who sign the contracts and is responsible for ensuring that the buyer has accurate information to make a purchasing decision. If an agent or third party was to provide information on behalf of the vendor, it would still be the vendor signing the information off.

One example of a third party’s actions resulting in a successful claim against a vendor is in Strover v Harrington [1988]. A farmhouse property was described as having mains drainage when the property did not have mains drainage. The vendor did in fact give the right information to the buyers solicitor, who failed to pass this information on to the buyer. It was held that the loss to the buyer was not as a result of misrepresentation but the solicitor was likely liable for professional negligence.

Should an agency encourage a seller to complete a Property Information Form prior to an offer?

The major benefits of Property Information Forms is that they offer transparency for the property being sold. There is a difference however, between what is helpful in marketing the property, and what is a need-to-know for the buyer to complete the sale. Best practice might be to divide the form into two sections, for the vendor to complete each one at distinct stages of the sales process. The first of these two sections being the questions aimed towards marketing the property. And the second being the finer details a buyer is going to need to make an informed purchasing decision.

Even with the form divided in two, it’s advantageous for a seller to provide the information early because not providing the information, could be a reason for a sale either not being perused or worse, for a sale falling through. Some suggested sections to include in a marketing focused part 1 might be:

  • The situation with ownership details and any associated charges
  • If there are any new building, conversions or alterations to the property
  • The timings of the sale
  • If there are any potential liabilities with the property
  • If the property has solar panels
  • Whether there are any protected buildings or trees
  • What are the rights for access, services and are there any shared facilities
  • Reporting the situation with parking, flooding and any current and historical disputes

In a market where supply is out-stripping demand, the availability of more information demonstrates that the seller is really serious. According to a report by Quick Move Now, 31% of property sales fell through during the middle part of 2022. This looks to be up from a 2018 report by HOA’s YouGov study where the number was significantly lower at 20%. 

As an agent, it is worth addressing the barriers your vendors may present as to why they don’t want to complete a PIF, or parts of a PIF sooner. Largely, this is going to be down to the time investment to complete the form, the time restraints in preparing to move, or their perception of the forms importance. Dividing the form up and educating the vendor that an informed buyer is more likely to complete, will help everyone secure a sale sooner. 

End of the Help-to-Buy Scheme: Know how to prepare

Do buyers understand the impact of a staged ending to the Help to Buy scheme?

 

The full economic consequence of ending the Help to Buy scheme isn’t yet known. But whilst much speculation exists within the industry around the pros & cons, there is clarity for the final stages. The way the scheme will be brought to a close has been clearly defined, including definitions for the eligibility to submit applications, the specific geographical financial value bands for borrowing, and ultimately, the explicit steps which will be taken to close the scheme.

Help to Buy is a government scheme for first time buyers. It is a loan that a buyer puts towards the cost of a new build. For those who are eligible, they can borrow 20% of the property’s value, or up to 40% for those in London. Throughout the term of the loan, the buyer isn’t required to pay off the loan, but the interest on the amount borrowed. When the property is sold, all the equity loan must be repaid.

 

Why was the Help to Buy equity loan scheme created?

The loan was launched in April 2013 to help bolster the housing market during a challenging climate. Its purpose was to assist those struggling to purchase their first property. It offered a way for first time buyers to get onto the property ladder sooner. The scheme stipulates specific eligibility criteria where those using it must:
 
  • Be 18 or over
  • Be a first time buyer
  • Be able to afford the fees and interest payments

The property being purchased must:

  • Be a new build
  • Be sold by a Help to Buy registered home builder
  • Be the only home the buyer owns and lives in

If a person has owned a home or residential land in the UK or abroad, they are ineligible. They’re also ineligible if they’ve had sharia mortgage finance.




How will the scheme closure deadlines impact imminent and accepted applications?

A buyer must submit their application for an equity loan by 31st October. Homebuilders must have registered the property onto the scheme for this to be possible. The buyer must also have a PIF (Property Information Form) submitted to a Help to Buy agent, prior to the deadline. Anyone purchasing at this late stage must check (for their own peace of mind) with their homebuilder to ensure a qualifying property completion deadline will be met and that the home will be built before the new year. A new home warranty is also required by the final day of 2022.

What if a property isn’t ready in time?

There’s a foreseeable risk of some housing projects over-running. This means some new homes not meeting the cut-off date for the closing of the Help to Buy loan. Regarding reservation fees and deposits there is security in the event of missing the deadline. But unfortunately, this may not be a full consolation to buyer’s with their eyes on a dream home.
 
  • If a homebuilder is unable to complete by the deadline, the homebuilder must return the full reservation fee.
  •  If a buyer has exchanged, the homebuilder must release them from the contract unconditionally and return the deposit.
  • Legal fees and financial advice costs, may still need to be paid.
Homebuilders are working to two Longstop Dates. These dates are the 31st December 2022, and the 31st March 2023.

“The First Longstop Date is 31 December 2022, and this is the practical completion deadline. Your homebuilder must have finished building your home so it’s ready to live in, and your home must have received a new-home warranty to be eligible for Help to Buy.”

“The Second Longstop Date is 31 March 2023, and this is the legal completion deadline. This is the last date you and your homebuilder can legally complete the purchase of your home

*Source: Help to Buy: Equity Loan (2021-2023) applications closure – frequently asked questions, accessible version – GOV.UK (www.gov.uk) 

Is there a replacement for the Help to Buy equity loan scheme? 

 

Are Lifetime ISA’s an alternative to Help to Buy ISA’s?

 Lifetime Individual Savings Account’s aren’t a new scheme. The Lifetime ISA’s have been around from 2017 and were not created as a replacement for Help to Buy, but have been used in conjunction. A person can only use the government bonus from one of them for a property (even though they both offer 25%). Lifetime ISA’s also come with eligibility requirements. These include a person being 18 or over but under 40. There is a maximum value to save each year which is £4,000, until that person reaches the age of 50. The government pays out a bonus of 25% up to a maximum of £1000 per year (annual ISA limits also apply here). 

“If you have a Lifetime ISA and a Help to Buy ISA, you can only use the government bonus from one of them to buy your first home.

You can transfer money from a Help to Buy ISA to a Lifetime ISA. If you transfer money from a Lifetime ISA to a Help to Buy ISA you’ll have to pay the 25% withdrawal charge.” – GOV.UK

 

 

Email threats facing estate agency in 2022

Email is one of the biggest cyber security challenges facing not just estate agents but all businesses today. Research conducted by Microsoft indicates that over 90% of cybercrime begins with email, so it’s important that every organisation has a plan to prevent these threats reaching staff.

The reason email is the prefered choice of cyber criminals is simple – it bypasses the technical measures and protections your IT administrators have put in place and preys on the social fallibility of people working within the organisation to unknowingly breach your cyber security.

A sophisticated or targeted breach can be devastating, with criminals then able to embed themselves within your IT estate, sometimes installing backdoors making themselves perrenial, which can then require a complete rebuild of networks, devices, and infrastructure to ensure bad actors don’t still have access to your data. Late last year, the conveyancing firm Simplify was victim to a cyber security incident which directly obstructed business for weeks and ultimately took months to fully remedy. I observe now that solicitors have created landing pages allowing canned legal claims against Simplify for the disruption caused to property transactions, which I’m sure is one of many knock on effects from this incident which has distracted Simplify from its core business for much of this year.

This is why paying attention to your cyber security practices proactively is so important: because if you are unfortunate enough to suffer a breach, despite you being a victim of crime, the attention of your customers and the media will not be of pity, but rather of skeptism regarding your processes put in place to prevent the breach (e.g. security), and measures applied to minimize the damage should there be one (e.g. encryption). Don’t be one of the businesses closing the stable door after the horse has bolted, much like Uber, seen hiring for an increased number of cyber security professionals following their breach this month.

So how are the criminals breaking in?

1) Spear phishing

“Hi it’s Alex here, landlord at 13 Kingston Road. You and I spoke last Thursday about my rent payments. I need you to change my bank details…”

Spear phishing is a targeted, often researched cyber attack. The research allows the criminal to appear legitimate to your member of staff. This is a particular threat to agencies who tend to communicate personally identifiable information about their customers, or the nature of their business via email. Bear in mind, if a hacker has gained access your clients email, they may know a huge amount of information about names, places, dates and amounts that would lead you to believe the communication is genuine.

2) Business Email Compromise

“Hi John it’s Mary here at accounts. The supplier at Queen Street have issued this invoice and it’s urgent we pay this today…”

Business email compromise is an advanced form of spear phishing where the criminals will impersonate key members of your staff, either to other staff in your organisation or to your clients. This attack is most commonly seen in the property industry as fraudsters sending false bank details during the conveyancing process to persons about to commit to a transaction, such as a deposit.

3) Ransomware, trojans, malware

“There is a tax issue on your account. Click this link or face legal consequences”

Usually the first phase in an attack, the criminal will attempt to trick a member of your staff into opening an attachment or link which causes their computer to run a malicious program of software (malware). Because the program is running within your IT estate, it is often the case that such programs can run rampant stealing, damaging or holding to ransom your business data across all departments. Many businesses are surprised that their backup and disaster recovery plans fail entirely when faced with ransomware – which can end up unfortunately ransoming the backups and cloud-stored data as well if they are not properly protected. Fortunately, your IT administrator can help protect against this by running and maintaining anti-virus software, but do make sure this is running on all devices (difficult when staff are using their own phones!).

How can we improve?

Don’t rely on email for communicating sensitive business transactions. Use it to arrange people into safe spaces to conduct business, such as face to face meetings or secure property technology platforms where the identity of your customer is verifiable.

Most agents I have worked with have been using Microsoft Outlook as their app for working with email. By integrating property technology into Outlook directly, we can help make email more secure.

  • Clients will always end up using email to communicate with your business, even when other solutions exist, such as a portal app. They will take the path of least resistance to them and follow the process they are the most familiar with. Access to email is ubiqitious, access to your app might not be.
  • Thus, your staff will receive requests for account changes or personally identifiable information via email. It’s easiest if your staff can respond intuitively from within Outlook to close the opportunity for a potential threat to be realised.
  • For instance, when receiving a request to change bank details, your staff can now be prompted with your (customizable) notices to them helping them further secure that request, like so:

If you’d like to learn more about how Finch can protect your organisation from email threats, please get in touch, or join our newsletter for more tips.

Energy Performance Certificates – Proposed Changes

Energy Performance Certificates Image

Are your landlords ready to get their Energy Performance Certificates’ Energy Efficiency Rating to a C by 2025?

 

The consequence for non-compliant landlords are financial penalties of up to £5,000 per property. This article is set out to address the up-coming changes within the private rental sector, and advise agents on best practice for their landlords. The penalties are:

  • Renting out a non-compliant property
  • Providing false or misleading information on the PRS Exemptions Register
  • Failure to comply with a compliance notice
 

What’s currently required by the landlord for their Energy Performance Certificates?

From October 2008, properties being let or sold in England and Wales require an Energy Performance Certificate (EPC).

“An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient)” – GOV.UK.

In 2018 a Minimum Energy Efficiency Standard (MEES) was introduced, requiring all properties to be let to meet an energy efficiency band of E. Any properties within the bands of F or G can not be let and need the landlord to take appropriate action to comply. The cost relating to the landlord’s appropriate action has a financial cap of £3,500 and includes actions such as loft and wall insulation, upgraded boiler, double or triple glazing, etc. Beyond this maximum cost, a landlord can apply for an ‘All improvements made’ exemption and will be awarded the EPC to let the property.

Energy Performance Certificates exemptions
- https://www.gov.uk/government/publications/private-rented-sector-minimum-energy-efficiency-standard-exemptions/guidance-on-prs-exemptions-and-exemptions-register-evidence-requirements#all-improvements-made-exemption

2018 saw the MEES applied to the issuing of new certificates. Certificates are valid for 10 years and from the 1st April 2020, this was extended to all existing tenancies. This now means that as of today, September 2022, an EER rating of E or above is required for a landlord to let their property, or an ‘all improvements made’ exemption needs to be registered.

What is the long-term action plan for Energy Performance Certificates?

An EPC Action Plan was created in September 2020 by the Department for Business, Energy & Industrial Strategy along with the Ministry of Housing Communities & Local Government. The plans laid out by these departments have 2035 as the target for as many homes as possible to have an EER of B and C. Changes have been suggested for the Standard Assessment Procedure (SAP) for EPC’s throughout 2022 with an expected roll-out of the consultation in 2025. Topics being consulted upon included:

  • Reducing EPC validation periods
  • Raising the maximum spend landlords are required to invest to £10,000. This has the proposed requirements applying to new tenancies from 1 April 2025 and to all tenancies by 1 April 2028.

Minimum Energy Efficiency Standard Timeline

Energy Performance Certificates timeline

If properties aren’t upgraded, then what?

It is a Government requirement that properties meet an EER of E or better before being let. If the properties aren’t upgraded, and exemptions aren’t requested, then the local authority may issue the landlord with a financial penalty.

Here are the penalties presented on GOV.UK

The maximum penalties amounts apply per property and per breach of the Regulations. They are:

  • up to £2,000 and/or publication penalty for renting out a non-compliant property for less than 3 months
  • up to £4,000 and/or publication penalty for renting out a non-compliant property for 3 months or more
Documentation:
  • up to £1,000 and/or publication for providing false or misleading information on the PRS Exemptions Register
  • up to £2,000 and/or publication for failure to comply with a compliance notice

Maximum amount you can be fined per property is £5,000 in total. – GOV.UK 

Top 3 reasons for properties failing to achieve the required rating to let

There are a few reasons why an EPC rating might be lower than expected. These are some of the major culprits for poor energy ratings:

  • A large portion of walls being poorly insulated, allowing them to lose heat.
  • Similar to the walls, having no or little loft insulation.
  • Poor heating – specifically, having electric-only heating can significantly reduce performance.

Helping your landlords meet the standards

Determining the rating of your landlords EPC is easy through the Find an Energy Certificate portal, where a postcode search will provide the energy rating along with the valid until date. 

It is important to consider your landlords compliance with the up-coming changes around MEES,  proposed reduction for the EPC validation periods and the proposal for the minimum spend to increase from £3,500 to £10,000 before exemptions can be requested.

An example of where a landlord might need guidance

  • The Property is currently rated as an E (2022) and needs £3,500 spent to bring it to a C for 2025.
  • Following the £3,500 spent, the property is still only rated as a D, but the ‘all improvements made’ exemption has been granted allowing a certificate to be provided,  the EPC is valid for 10 years, but the exemptions are only valid for 5.
  • In order to begin a new tenancy, the landlord will need to comply with the MEES by holding an EPC for the property with an EER of C or better. As exemptions only last 5 years, the original EER would expire and an amount up to a cap of £10,000 could need to spent to upgrade to a C, before any further exemption can be re-made. 
  • If the property is let after 2028 and the spending cap is raised to £10,000, The landlord may find themselves having to pay an additional £10,000 on top of a recent £3,500 spend for a valid EPC. 

Guide landlords through the changes to Energy Performance Certificates

Using a digital process to manage this for your landlords is the obvious solution, but it will need to go beyond a CRM filing system. For many agencies they will be faced with a large number of landlords, some of these landlords will have multiple properties and all of their EPC’s will have 10 year expiration dates at differing times.

An action plan as an agent could be a written proposal or suggestions list to the landlord to help them continue to let their property over the coming years to educated on the EPC changes and where possible, propose your suggestions on how to navigate these changes most effectively. Summarise the requirements as stated above, specifically highlighting the issues to those landlords who are (or will be) in the wrong band, making sure that they are clear on the regulation changes. 

The best way to achieve this; remind them which band their property is currently in, explain the penalties for non-compliance and importantly, to highlight the potential benefits of moving up the energy rating grades as it relates to sale value in the future. Finally, you may want to point your landlords toward the Governments “Green Deal: energy savings for your home” as well as checking that a Green Deal company they’re using is genuine. 

Ultimately this is all about bringing landlords up to speed and helping them to prepare their properties for the change without falling into any avoidable pitfalls.

UK Right to Rent from October 2022

Using innovative technologies to check a tenants’ Right to Rent

According to law, all UK tenants must go through verification by way of Right to Rent Checks. The Right to Rent check was introduced across England in 2016 and includes collecting and verifying documents to confirm that the tenant is allowed to rent within the UK. If a landlord or agent lets to a person who does not have the right to rent in the UK, or if they have not carried out the correct Right to Rent Checks, they can be sent to prison for up to 5 years or receive an unlimited fine. Penalties range from £1000 for a first time offence and £3000 for subsequent offences.

Up until the COVID-19 changes, Right to Rent Checks were required to happen face-to-face, again prescribed by the government. One of the main reasons for this was that both the identity of the prospective tenant and the documents they provided needed to be verified in person.

COVID-19 came with significant and rapid restrictions across all sectors and the property sector certainly took a hit. As a result, the government permitted virtual Right to Rent Checks, but this will be ending soon. The country will be reverting back to a face-to-face process, however for the first time ever, landlords and agents will be able to choose from approved virtual Right to Rent Check vendors to approve a Right to Rent.

The information-gathering needed for British tenants

Once a let is agreed, a Right to Rent Check must take place. The landlord or agent must obtain the documentation to prove their right to rent and should take all reasonable steps to check the validity of the documents presented. The tenant must visit the landlord or agent’s office with original versions of all the document so that in the presence of the prospective tenant or tenants, the relevant checks can be made. The landlord or agent must then conduct laborious checks on each document and create clear copies of the documents in a format which cannot be altered and retain the copy securely: electronically or in a hard copy.

Landlords and agents are required to check the following during the Right to Rent Check, as per UK law:

  • They must check that all the documents provided are genuine, original, unchanged, and belong to the tenant in a face-to-face meeting.
  • They need to check that the dates on the tenant’s Right to Rent in the UK have not expired.
  • Landlords and agents must ensure photographs are the same across all documents.
  • If the documents presented have different names on them, the landlord or agent must receive supporting documents showing why they’re different.

How COVID-19 changed the process of letting to British tenants

When the COVID-19 pandemic hit the UK, harsh restrictions were put in place by the government, including total lockdowns. As restrictions eased and companies could function again, the government made provisions to allow the Right to Rent checks to happen virtually.

The government allowed landlords and agents to conduct a provisional Right to Rent Check via video call, where the tenant was required to hold up their original documents to the camera for verification. It was also permitted that Identification Document Validation Technology (IDVT) could be used to carry out the checks.

What changes post-pandemic?

When restrictions eased completely, and the UK economy settled into the ‘new norm’, the government released new guidance that, virtual Right to Rent Checks were no longer allowed from the 6th April 2022. They stated that the face-to-face process was to be restored.

However, after some consideration, the guidance has changed once more. Virtual Right to Rent Checks are still permitted until and including 30 September 2022. Thereafter, Right to Rent Checks must either happen in person or through government-approved technology vendors.

From 1 October 2022, Landlords and agents can conduct Right to Rent Checks and onboard new tenants remotely through compliant digital trust frameworks. For the first time ever, landlords and agents will be able to conduct the Right to Rent Check entirely remotely.

What changes if I check Right to Rent using a digital trust framework?

The two routes offered for a landlord or agent to check a tenants Right to Rent are; physically in person or by using a compliant digital trust framework. The outcome of both of these routes is the same, neither holds more weight legislatively and ultimately it comes down to the perceived ease for the landlord or agent to make a decision. The digital route cuts out the process of human scanning of documents to verify the key data points, reducing the risk of oversight and error which could lead to civil penalties. It also reduces the time-thirsty process of onboarding tenants, removing those inconveniencies preventing agreements being made in real-time, such as the arranging of a date to bring the ID, as well as travel to get to the landlord or agent.

Who is responsible for these checks?

This is an interesting and important question of liabilities. The landlord is primarily responsible and therefore liable for the Right to Rent Check being carried out correctly. It is their property and they are contracting with the tenant. If an agent has agreed to let the property on the landlords behalf, then the landlord is still liable unless the agent has been appointed contractually to ensure that the Right to Rent Checks are completed and that the checks are compliant. The written agreement must make clear that:
 

This final point is particularly important as the liability, for example cannot be transferred to 3rd parties, such as tenant reference agencies or similar. Neither can the landlord automatically assume that the agent is responsible.

At Finch, we are dedicated to ensuring that these types of considerations are clearly defined and handled within our digital processes provided to our agent customers. Residential agents should ensure that their terms of business documents clearly define who is responsible for correctly carrying out the Right to Rent Checks and where the liability sits. This will help to avoid any uncomfortable disputes further down the line.

UK Right to Work from October 2022

Using innovative technologies to onboard British employees

According to law, all UK employers must complete right to work checks for new British employees. The right to work process includes collecting and verifying documentation for an employer to confirm that the job applicant is allowed to work for them. In fact, employers can face a civil penalty if they employ an illegal worker or have not carried out the correct right to work check.

Until now, interviews with potential candidates and right to work checks were required to happen face-to-face, again prescribed by the government. One of the main reasons for this was that both the identity of the applicant and the documents they provided needed to be verified in person.

During the restrictions put in place as a result of Covid-19, the government permitted virtual right to work checks, but this will be ending soon. The country will be reverting back to a face-to-face process, barring a few approved virtual right to work check vendors.

Using innovative technology, we have developed an app that we believe will streamline and improve the onboarding process for British employees.

The information-gathering needed for British recruitment

After a face-to-face interview and if the applicant is successful, a right to work check must take place. The successful candidate must send the employer documentation to prove their right to work. The applicant must then visit the employer’s office with original versions of all the documents previously provided, and the employer must then conduct laborious checks on each document.

Employers are required to check the following during the right to work check, as per UK law:

  • They must check that all the documents provided are genuine, original, unchanged, and belong to the applicant in a face-to-face meeting.
  • They need to check that the dates on the applicant’s right to work in the UK have not expired.
  • Employers must ensure photographs are the same across all documents.
  • They need to check that the applicant has permission to do the type of work offered, including any limitations on the number of hours they can work.
  • In the case where the applicant is a student, the employer must be provided with evidence of their study and vacation times.
  • If the documents presented have different names on them, the employer must receive supporting documents showing why they’re different.

Perhaps the most frustrating part of the right to work process for both the employer and the new employee is that if any step in the process is missed or occurs incorrectly, the process has to start over from the beginning.

How Covid-19 changed the onboarding of British employees

When the Covid-19 pandemic hit the UK, harsh restrictions were put in place by the government, including total lockdowns. As restrictions eased and companies could function again, the government made provisions to allow the right to work checks to happen virtually.

From 30 March 2020, the government allowed employers to conduct interviews virtually via video call platforms like Zoom or Microsoft Teams. They were also permitted to conduct a provisional right to work check via video call, where the applicant was required to hold up their original documents to the camera for verification. It was also permitted that Identification Document Validation Technology (IDVT) could be used to carry out the checks.

However, employers must still conduct a face-to-face verification of the applicant’s documentation as soon as possible following the remote check. Following the end of temporary Covid-19 measures, a deadline will be enforced for right to work checks conducted provisionally to be completed either in person or using post-pandemic rules.

What changes post-pandemic?

When restrictions eased completely, and the UK economy settled into the new norm, the government released new guidance that, from 17 May 2021, virtual right to work checks were no longer allowed. They stated that the face-to-face process was to be restored.

However, after some consideration, the guidance has changed once more. Virtual right to work checks are still permitted until and including 30 September 2022. Thereafter, right to work checks must either happen in person or through government-approved technology vendors.

From 1 October 2022, employers can conduct right to work checks and onboard new employees remotely through complaint digital trust frameworks. For the first time ever, employers will be able to conduct the right to work check entirely remotely.

How a Right to Work app changes employee onboarding

We have developed an app that we believe is the perfect alternative to face-to-face and video call right to work checks. The face-to-face process is archaic and unnecessary, and holding up documents on a video call is a risky way to verify someone’s right to work information.

The Right to Work app is an innovative remedy as it allows for the entire right to work check process to happen virtually on one secure app. Right to Work is a fully digital, remote complaint solution that allows for the right to work check to happen virtually. It also ensures that every step of the right to work check is completed in full and accurately, preventing the employee and candidate from starting over again as mistakes won’t be made – this ultimately saves time and money.

Right to Work allows employers to provide successful applicants with their job offer, letter of employment, and contract – which they can sign electronically on the app. All records of the documents in the right to work check process are stored safely in our vault, which can be accessed by HR.

You’re also able to verify bank details for payroll, capture ID in a compliant way with the UK digital trust framework, and have all documents signed electronically.

Interested in finding out if our Right to Work app is right for your organisation? Sign up for early access and receive a 30-day free trial of Right to Work, which includes your next employee onboarding for free, or learn more here.

Early access sign up

Finch employee onboarding will be available to use in June. Sign up now for early access, including a 30-day free trial and includes your next employee onboarding for free.

Staying on the right side of the Property Ombudsman

Yesterday the Property Ombudsman released their annual report covering the 2020 calendar year, the full report can be found here, the headlines are as follows.

  • Enquiries increased year-on-year with a record 39,285 reported, up 29% on 2019
  • 5122 of the enquiries received were accepted as complaints, up from 5106 the previous year 
  • 2473 complaints resulted in a financial reward  
  • Agents were instructed to settle total claims of £1.9 million
  • Highest award paid by a sales agent £24,139
  • Highest award paid by a lettings agent £20,838   
The above represents just a fraction of the amounts being paid out by agents due to non-compliance or poor practice. Agents are regularly falling foul of the AML & KYC regulations resulting in four figure fines  or in some cases much higher as this article highlights. 
So why are agents hard earned fees being eroded in this way?

Whilst the larger independent and corporate agents will have dedicated compliance departments a large proportion of the 25,000 plus estate agency businesses in the UK do not. Small business owners ware many hats and even with the best of intentions compliance is sometimes overlooked. It’s easy to understand due to the sheer volume of regulation. A recent study identified that lettings agents alone collect in the region of 110 data points just to get a property on the market, much of which falls under regulation ranging from KYC to the consumer protection act. If the agent then goes on to let the property and manage it as well the compliance burden continues to grow. The following is a list of the legislation (not exhaustive) that agents need to be aware of .

  • Consumer Protection from Unfair Trading Regulations 2008
  • Estate Agents Act 1979 + Regulations
  • Money Laundering Regulations 2017
  • Consumer Contracts (Info, Cancellation and Additional Charges) Regs
  • The Property Ombudsman Code of Practice
  • Companies Act/Business Names Act 1985
  • The Energy Performance of Buildings (Certificates and Inspections) Regs
  • Data Protection Act 1998
  • Electronic Commerce (EC Directive) Regulations 2002
  • Town & Country Planning (Control of Advertising) Regulations
  • Unfair Terms in Consumer Contracts Regulations 1999
So where are agents falling down?

It seems many agents are getting into trouble right at the start of their relationships, with complaints relating to instructions/terms of business featuring second on the list for sales agents and third for lettings agents, with poor communication and record keeping coming in first and second respectively.

The importance of ensuring that T&C’s are clear and relate specifically to the customer and their specific circumstances can not be overstated. In addition gaining approval for agent produced marketing collateral is a must, it’s sometimes seen as an irritation and a delay to getting a property on the market but it is certainly best practice and a requirement for those agents who are Property Ombudsman members.

Is Tech the answer?

Tech can certainly help, there are a variety of great solutions available that can assist the agent / client relationship right from onboarding through to end of tenancy or sale completion. The key is ensuring you know your obligations and then choosing the most suitable solutions for your business.

Best Practice

An array of compliance tech will help but will not keep an agent safe if used poorly. 

More and more agents are now looking to protect their position by not only making sure their teams receive the required training, but also ensuring they provide adequate instructions to ensure their team knows what to do, how to do it and when to do it.

To do this correctly, professionally and provide the required due diligence audit trail, agents need written instructions and this is best done by means of a Compliance Manual. This will combine a list of the legal obligations with the what, how, when. When creating such a document a review of the following items is recommended. 

  • Registrations
  • Terms of Business
  • Standard Letters & Documents
  • In-house Procedures
  • Websites
  • Advertising
  • Auditing property files

This may sound daunting especially for those smaller businesses without dedicated compliance teams but as the fines show the regulators have teeth, so it’s probably a false economy not to have a formal compliance regime in place.  

Getting Help

Staying compliant is a considerable task and one that is only set to grow. For those that have the time there are plenty of resources on line, Propertymark and The Property Ombudsman also offer comprehensive compliance services to their members.

For those who are perhaps looking for something more interactive consultancies such as EA Compliance can provide a bespoke service ranging from answers to a specific question to a complete compliance heath check.

Portal Wars – Do the public really have the appetite?

It’s just over four month’s since three became four and Boomin joined the ongoing struggle for agent and consumer market share. Having worked for a major Proptech CRM supplier for the majority of the 2010’s I saw up close and personal the battle between the big two Zoopla and Rightmove and the emergence of the third player, On The Market. 

As Managing Director at Finch I’m focused on improving the quality of data collected by agents. Some of that data collected from landlords and vendors goes on to feed the property portals – and so the quality of the property listings on websites like Rightmove is directly correlated to the original quality of the data supplied. As we build our latest workflow “marketing collateral approvals”, I put myself in the place of an applicant looking to buy or rent and went online.

The first question that crossed my mind was “do the public really have the appetite for a forth portal and will it improve their experience?”

I’ve summarised what I found and provided my conclusions and I’d be interested in your view, if you would like to leave a comment you can find me over on LinkedIn

As the table above shows Zoopla provides the best overall experience but of course Rightmove still carries the most properties which is the main reason the consumer is there in the first place. As the most mature platform it’s surprising Rightmove’s offering is still much the same as it was five years ago. Why? 

One of the challenges faced by all the portals is getting the data they require from the agents. In its infancy Rightmove created a data feed specification (ADF) which soon became the de-facto standard for third party systems needing to upload data to property portals. Zoopla did eventually release their own data feed specification but to all intents and purposes the data collected by the portals from agents is the same and hasn’t changed dramatically year on year. One of the reasons for this is the costs involved in changing the data feed contents. Once agreed Proptech CRM suppliers then need to update their software to 1) hold the data and 2) include it in their feeds. One of the most high profile changes to portal data feeds in recent years were the alterations required to cater for the Tenant Fee ban which came into force in June 2019. As can be seen by this article in Property Industry Eye some agents are still getting into hot water two years on.

The key point here is that portals will be reluctant to force feed changes on agents because of the potential disruption and cost and rarely do unless required to by legislation. It’s a risk for the portal especially the newer entrants who don’t want to put obstacles in the way of an agent joining or staying with them. 

So the portals are generally speaking working with similar data, how are they performing?

I found my self frustrated with the lack of uniformity in where data was displayed and how it could be filtered, not just across the different portals which is to be expected but within the same portal. This in a lot of cases is because there are not always specific locations for a data point, so the agent will just use a general text field such as property description or bullet points. 

As an example if I wanted to restrict my search to Freehold properties the only way to achieve this was via a keyword search which returned sketchy results at best. Whist on the subject of tenure I found no formality in the way remaining lease lengths were communicated. To me this is an important data point especially when evaluating the price being asked for a property. Some would simply state lease = 99 years, others lease remaining 99 years. Without knowing when the lease commenced both statements are meaningless. Tenure is just one example, generally I came away underwhelmed with the searching experience.  

Basics not Gimmicks. With the arrival of Boomin we now have the option of signing up for “Secret Property” alerts. This feature provides access to properties that are being valued but are not yet on the market. Personally I’d rather spend by time looking at properties that have actually been instructed rather than those that might come to market or of course might not!  

For the consumer the ideal scenario would be a single portal being feed all available property. Portal aggregators such as www.nestoria.co.uk have attempted to provide something similar but of course do not carry stock from all the major portals so in essence it’s yet another portal for the consumer to register with showing very few unique properties.

Conclusions

Do the public really have the appetite for a fourth portal? In my view no.

Whist the consumer utopia of a single portal is unrealistic perhaps the best we can hope for is a merger between OTM and Boomin. If the combined millions they are currently spending on competing platforms were combined they should be in a position to provide a real third choice. This in turn should drive up standards and innovation providing real competition for Rightmove and Zoopla.