With the papers focusing on Brexit, it’s easy to see how big changes to housing policy could slip under the radar. Unsurprisingly two key reforms have gone largely unnoticed as our impending exit from the EU continues to dominate the press.
The first change announced by Communities Secretary James Brokenshire is the introduction of a new Housing Complaints Resolution Service which is intended to be the go-to place for all housing related grievances. The Service will handle with every complaint from homeowners and tenants alike, from issues with landlords to complaints about builders.
The new system will replace the housing market’s current fragmented complaints system which involves multiple complaints bodies and which fails to provide adequate support for some tenures. Private landlords, for example, do not have to register with a complaints system, so private tenants have far less avenues for redress.
With the proposed changes, Landlords will have to join a redress system and will be obliged to make compensation payments should the redress body order them to do so. Some 1.5 million landlords will face fines of up to £5,000 if they do not join the scheme.
The Government has also reiterated its commitment to establishing a New Homes Ombudsman to look after the interests of those buying new build homes by holding developers to account. It plans to legislate as soon as possible so that new developers will be required to belong to the Ombudsman.
In addition, established developers will have to sign up to the Ombudsman by 2021 if they want to be part of the Help to Buy scheme. This scheme enables homebuyers to purchase a newly built property with the help of a Government loan covering up to 20% of the cost (interest free for 5 years). Buyers must find a 5% deposit and secure a 75% mortgage for the balance. The scheme is an incentive for buyers to purchase new properties so developers will not want to lose access to what can be a lucrative selling point.
A further change to be introduced affects estate agents who will be obliged to reveal referral fees in an effort to boost transparency. Where estate agents send business to a solicitor in exchange for a referral fee, the agent will have to ensure the homebuyer or seller knows what that fee is. The increased transparency should reduce instances of excessive referral fees but if it does not, the Housing and Homelessness Minister has said they could be banned altogether.
Another measure that will be introduced later in the year through a pilot scheme involves the payment of a deposit by buyers and sellers once an offer has been accepted. If either party pulls out of the transaction, their deposit will be lost. The aim of this initiative is to reduce the 30% of sales that fall through for often trivial reasons, leaving the innocent party with legal and other expenses.
From June 1, a further change will impact the property market: letting agents and landlords will no longer be able to impose fees on private tenants.
If you are a Landlord or Estate Agent and you have questions about the impact of the above changes on your business, get in touch with our property team.