Beware of the Green Deal - it could all go Pete Tong!

Homeowners will be besieged with offers of energy efficient improvements to their home with the headline of ‘no up-front’ costs but as with most deals which appear to good to be true, there are pitfalls.

The reality is that Green Deal providers foot the bill with the homeowner repaying the debt over time via a charge on their energy bills.  Sounds simple.

The arrangement is essentially a loan and therefore protection is provided under the Consumer Credit Act. This means the provider is obliged by law to provide certain information, such as the total charge for credit, any APR, how repayments are calculated, information about cancellation rights etc.  That’s the good news.

The bad news is that, like anything bought on credit, improvement works will cost significantly more than they would if paid for up front.  As to whether the hem owner will be advised of cheaper alternatives will remain to be seen.

There is a sort of a safeguard through what is known as a "Golden Rule" – that the cost of repaying the loan should not exceed the estimated energy savings each period. So, for example, if it is estimated you will save £50 a quarter on your energy bills, your Green Deal provider may not recover more than £50 a quarter from you to pay back your loan. But the key word here is ‘estimate’ what if the actual savings are less?   Does this mean the provider will refund the difference?  In short the answer is an emphatic no.   The risks will be explained but I suspect little emphasis will be given to the same.

The other downside is that the ‘debt’ follows the property and not the person who took the loan out.   This means when the homeowner sells it will be the buyer who picks up responsibility for the liability.  Purchasers may not be able to afford the repayments, particularly first time buyers.

The scheme seeks to address this concern in two ways. First, there are extensive rules about disclosure – anyone selling a property must tell a prospective buyer if there is a Green Deal attached to it; the buyer must be notified before the seller accepts an offer at the very latest. Second, the code of practice states that if the occupier of the house changes, the provider should reassess the affordability of the plan for the new occupant.

This presents practical problems and could make a property with a Green Deal attached more difficult and/or more expensive to sell.  The disclosure requirements are strict, and a buyer must consent to any Green Deal in writing.  A homeowner who fails to obtain such consent will have to pay compensation. What if a buyer does not want to consent?  There is little the seller can do beyond negotiating. They could, for example, offer to pay off the loan in full. In such cases, however, they should be prepared to pay an early settlement fee, and may well find themselves out of pocket if a buyer does not agree to any corresponding increase in the purchase price.

Even if a buyer does consent to the Green Deal, the reassessment requirement may disclose no or little saving given the buyer's needs and energy usage will inevitably differ. A buyer may therefore want the reassessment done before deciding whether to make an offer on a property, all of which is likely to take time.  This could cause delay or even the collapse of the transaction.

The idea is good but when you drill down and consider the small print as well as the complications that arise on the sale of the property, one is bound to seriously question the benefit of the estimated short term saving.  

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidp@mjpconveyancing.com

Success Story for East Anglian based Legal Practice

Legal 500 Norwich based legal Practice, MJP Solicitors, will soon be following the path taken by many of the Country’s leading lawyers by incorporating their business as a Limited Company.

From 1^st May MJP Solicitors will be creating two new companies – MJP Limited and MJP ConveyancingLimited – with the view to add strength to their already successful national clinical negligence and conveyancing services.

They will be part of a growing trend of legal practices taking steps to bring their business into line with modern day thinking on taxation and succession issues. 

According to Solicitors Regulation Authority (SRA) figures, 2,400 of the 10,973 law firms as of July 2012 were incorporated companies, compared to 1,898 a year before – a rise of 26%.

This move comes on the back of a very successful year for MJP who have seen their profits treble through the expansion of their clinical negligence and conveyancing offerings.  

David Jones, head of the MJP clinical negligence team, explains how despite the recent withdrawal of public funding and some of the worst trading conditions in the business’ history, he has seen business go from strength to strength:

“Trying to anticipate trends and careful forward planning has been the key.   This coupled with an investment in IT of over £80K and some focused marketing has helped us retain a national reputation in helping families all of the country with the consequences of surgical and treatment failures”. 

He adds:

“Many clinical negligence lawyers receive a bad press, but what is often overlooked is how lawyers like us have helped to provide a good and rewarding quality of life to many victims who through no fault of their own have suffered life changing injuries.   I also believe that due to our work we have helped to raise standards within the health service industry.

Commenting on the recent withdrawal of public funding and welfare reforms, Mr Jones remains upbeat:

‘Gaining access to legal services of the type we provide will be more difficult but we have several options and ideas on offer which will ensure that we will remain highly accessible to victims who wish to seek advice and support from our team of specialists.

Another part of the success story has been high level of growth in the property division of the business.  

“ We have over the past 12 months moved over 5000 clients”, states Head of Residential Property, David Pett. He adds “that despite the slowdown in the property market, we have seen over the past 18 months, the level of completed transactions increase from around 20 to over 200 each month.

Much of the success for this lies with the “in house’ creation of an online tracking and property log book IT system.   This allows estate agents and clients to track the progress of the transaction and with our unique Property Log Book we have been able to offer our clients added value to accompany a very competitive fee structure”.

Looking forward there exists, as Mr Pett explains, a positive plan for growth:

“We continue to recruit new staff and are already looking to expand the business further through careful acquisition decisions. We are on the constant look out for other providers of property related legal services that may be looking to be part of the exciting plans we have for the future.   Our aim is to be one of the largest providers of conveyancing services in this region within the next 5 years”.

MJP Solicitors – contact DavidPett on 01603 887067 for further information

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Buying and selling a property in England or Wales should carry a “Health Warning”

The legal system used to convey a property from one person to another has not changed since 1925 and as it currently stands as a Seller or Buyer each time you enter a transaction you are running the risk of sustaining a financial loss.

In a world where the focus is on consumer protection there are no safeguards offering protection when a transaction breaks down before contracts of sale are exchanged.

If you are selling a property or buying a property either party in that transaction can, as the law currently stands, pull out of the sale/purchase at any time up to the exchange of the contract of sale.

This means that the seller who had accepted an offer by a buyer, who has instructed a Solicitor, and invested time and emotion into the progression of a transaction could after months of marketing the property, find that the buyer has, at the last moment, decided to pull out.

During that period it is probable that the property has come off the market meaning the seller has lost numerous opportunities to find a serious purchaser.  This could, in a market where in certain parts of the Country, falling prices are still, result in a loss to the seller.

The loss to a buyer is often a lot worse when a buyer puts an offer in, it is accepted, Solicitors are instructed, a survey is arranged, only to then find later in the process that that the seller has  decided to pull out of the transaction. The buyer has no recourse against the seller, the fees incurred up until that point, often ranging between £1,000.00 and £1,500.00, are lost. There may be exposure to additional loss, if as in certain parts of the country, house prices are increasing.

I often come across incidences such as this and I share a couple of my experiences:-

“I paid for a survey costing £500.00. It came back disclosing faults. I tried to re-negotiate the offer price but the seller did not want to know. I had to walk away without my £500.00 and without a house”.

“I paid £850.00 for a survey on a different house. It came back with clear findings. After several weeks of phoning the Agent and the Vendor asking for a Contract and other related documents I was informed that he seller simply changed his mind and did not want to sell. I was left having to meet the cost of the survey and Solicitors charges of £400.00”.

So what can you do to try and avoid having to meet the cost of an abortive transaction?

If you are a seller it is advisable to ask the selling agent to find out whether the buyer has a mortgage, whether the buyer needs to sell another property before the purchase can complete, and whether the buyer is willing to pay to lodge with the agent a deposit to enable the property to be taken off the market and the transaction to proceed to exchange within a set period of time. This latter arrangement is quite prevalent in areas where house prices are continuing to rise.

I have come across other transactions where the seller has said to the buyer that if the transaction does not complete within a certain period of time the price of the property will increase.

If you are a buyer it might be worth speaking with the selling agent to find out how long the property has been on the market, whether there has been any prior transactions and if there have to try and ascertain the reason for their collapse. The Agent may be reluctant to give this information but you should push for it. It is also advisable to find out whether the seller has a property to purchase since this might also delay the transaction and give greater scope for failure.

There is need for the current and archaic system to be re-formed.

Then use of deposits by both the seller and the purchaser would be a way of securing some degree of commitment to the transaction before major expense is incurred. Alternatively, perhaps the time has come to look at how the selling and buying process works in Scotland and adopting this as a model.

Finally on this subject I share with you an experience that I recently came across where a seller decided that he was not prepared to sell his property to my client because he lived at the property for many years and was not happy that my client was intending to let the property out rather than use it as a ‘home’. It is regrettable that the seller did not disclose this to my client before a survey was undertaken, legal costs incurred and we were on the verge of exchanging contracts of sale! 

 Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Flash Flooding Risk - Ignore it at your peril

Are solicitors and those working with property doing enough to protect homebuyers?

Most solicitors will obtain an environmental search result and this will disclose whether the property to be purchased is close to or within a flood plain. But however many of those solicitors actually check to see whether the result includes areas where over the past ten years land and property has suffered damage from pluvial or flash flooding?

Flooding is probably the most significant natural hazard we face in the UK and around 2.8 million people are at risk from pluvial, or rain related, flooding, which represents around one- third of all flood risk in the UK. This figure could increase by 1.2m by 2050 due to a combination of climate change and population change. Population change has the potential to put three times more people at risk than climate change.

Since 2000, insurers have paid out £4.5 billion to customers whose homes or businesses have been hit by flooding. The 2007 summer floods were responsible for £3 billion of payments alone. It is estimated that the total value of assets under flood risk is more than £200 billion.

Pluvial flooding occurs when an extremely heavy downpour of rain saturates the urban drainage system and the excess water cannot be absorbed. This can occur without warning and in the worst cases, such as happened in Glasgow, York and Hull can cause huge destruction.

So what does this mean for the homeowner?

Increased Premiums

To begin with those in affected areas are likely to see increase in premiums and others continue to remain at risk of being priced out of insurance in twelve months’ time.

Possible non-availability of insurance

The ABI and the Government are still locked in negotiations over whether the insurance industry should continue to guarantee insurance for those who live in high-risk areas.

Without a new approach, the ABI estimates that up to 200,000 property owners will struggle to get affordable flood insurance when the current agreement with the Government ends in June 2013.

Possible non-availability of mortgages

The Council of Mortgage Lenders warned that the “big and significant issue” surrounding the potential lack of flood insurance would inevitably impact upon the housing market.  Significant increases in premiums or excesses "could compromise the affordability of the mortgages" and make it harder for the homeowner to find a mortgage. 



Possibly left with an ‘unsalable’ Property

Realistically if a property has been flooded in the past it is unlikely that someone will be interested in taking the property on particularly when there is a risk insurance cover could be expensive or possibly unavailable.  You also need to ask would you want to be living in a property when there is a risk that your home could be affected by flooding?

So this brings me back to where I started, are lawyers doing enough to protect clients from these possible consequences?  As a buyer what should you be looking to do to make sure your lawyer is carrying out checks on flooding?

If you are selling a property that has a flood history then this needs to be disclosed since if you fail to do so and the buyer relies on the representation the transaction could be set aside if the buyer later found out you had misled him.

If you are buying then you should make sure your lawyer carries out an environmental search and that the search result contain information on flash flooding.     If the property is in or close to a flood plain you should always invest in a flood report to obtain greater detail of the flood risk.   Paying £40 for a report is a small price to pay for the comfort of the information it will provide.

Check on Google as to whether there have been any reports of flash flooding in the area.   

Visit the Flood Agency website though make sure any information you rely on includes the risk of flash floods.

Check with your insurer in advance of exchanging contracts to make sure the post code of the property will not lead to you having to pay more for your insurance or whether there is a risk that the property may become uninsurable.

Inspect the property carefully or better still get your surveyor to report to you on whether there is evidence of past flood damage.

The message is that we should all exercise more care when we look at purchasing property to ensure the flood risk is given the priority is clearly warrants.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

How to purchase your perfect home

I am told that the moment you cross the threshold you will know there and then property you are viewing is the one for you.   That sixth sense!

Allowing your heart to rule you head can however present a danger. 

As your solicitors we will be able to check and advise on the legal issues but will find it far more difficult to advise on the suitability of the property as a home. Nor will we be able to advise on issues relating to the state and condition of the property or on matters relating to the local environment and amenities.  It is therefore very important to do your homework and to make sure your solicitor is fully appraised of all relevant matters when if comes to providing instructions.  Remember that in most cases your solicitor will not have visited the property.

So here are some tips:

To begin with always visit the property at least once during the day and once in the evening.   The seller will normally wish to give you a ‘guided tour’. Resist this and ask if you can spend some time looking on your own.  Move the furniture around if you can, as it would not be the first time a seller has moved a sofa to hide a damp patch! Be extra cautious if the house has been recently painted as it could be masking serious problems.

Visit the house on a rainy day to check for leaky roofs, walls or ceilings.

When viewing a property, determine how busy the road is, and whether there is any disturbance from flight paths.

Take a look at the crime rate for the postcode by visiting www.crimerates.co.uk/

If the standard of local schools is of importance you can find the latest Ofsted inspection report rating here: www.locrating.com/

Ask why the seller is selling especially if the seller has only owned the property for a short time. Ask them about the neighbours. Look out for knowing glances, avoiding eye contact or mumbling when they answer. And remember that if vendors have made a formal complaint of any kind about a neighbour, it is illegal for them not to tell you

Take a look around the surrounding area and check out the local amenities.  Walk rather than drive, as you will see more. Look at whether the streets are clean and litter-free, whether there is graffiti sprayed around, and whether gangs are hanging about; also establish if there's noise or light pollution from nearby businesses or immediate area.

If public transport is important check the location of the local bus/train station and timings of buses/trains by visiting: www.transportdirect.info

If the seller is a smoker, the smell may end up lingering in the home. You may also have to pay a hefty sum to cover the cost of cleaning and repairing the smoke damage.

Similarly, you may want to think twice before signing up to a property if the people selling it are pet owners, as it may be extremely difficult to remove all traces of the smell of dogs, cats or other animals.

Ask the seller who is responsible for maintaining the boundaries and if there has been any disputes, talk to the neighbours and see what they say, look out for any unusual characteristics and make sure you let your solicitor know if there are any.

Check with the local planning department to see if there are planning applications in place that could if granted affect the value of the property and or your enjoyment of the property as a home.

Check your mobile phone reception and broadband speeds within the home. The following website shows some of slowest areas in the country: http://on-msn.com/VwkVWd

If you are buying a flat speak to the other tenants and if there is a Residents Association establish contact and inquire about the Managing Agents and Landlord to see if they can be relied upon and whether there have been any problems.

Ask the seller whether there has been any flooding, whether the seller has had to make any insurance claims, whether there has been any underpinning or problems with dry rot, rising damp and or beetle or other insect infestation.

Take a look at the heating/central heating, hot water heater, drainage and other major systems. These installations can be costly if they are left in disrepair for too long.

Turn the taps on in the kitchen, bathroom and laundry to check the water pressure, performance and drainage. Check for dirty water.

Are there major cracks in the walls or do the doors stick? This can be a sign of subsidence. This can be an extremely expensive problem to fix and is usually not covered by house insurance.

Measure spaces in kitchens and utility rooms to make sure your appliances such as refrigerators, washing machines, dishwashers and microwaves fit. Failure to fit could add to the cost  of buying in terms of replacements.

I always advise that despite how short of money you may be do not look to make a saving by dismissing the idea of a survey. However well you look and inspect you will not be able to see everything and by investing in a survey you will find out so much more about the property and those who commission a survey are able to negotiate a reduction in the purchase price of around £2000.

Compare home prices in your area to make sure you are paying no more than market value.

Negotiate on the price. If it is a buyers' market, you will be in a position to drive a hard bargain.

So as can be seen while you may think you've found your dream home, the key is to make sure you do your research to explore if there are any issues that might deter you from proceeding further. This means asking the right questions during your viewings, and looking for the all-important details.

Good luck!

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk

Read this before moving home

Moving house is ranked as one of the Top Ten most stressful experiences in life. 

Charlotte Ribbons, Trainee Solicitor with MJP Conveyancing  examines the ups and downs of moving home 

Moving house is ranked as one of the Top Ten most stressful experiences in life. Having moved house myself last weekend I can strongly agree that uprooting a life’s worth of possessions, daily debates with my partner over whether it is really necessary to take my childhood memoirs and having spent a week wading through boxes to find basic items I can vouch that a divorce may have been slightly less traumatic.

I believe the highlight of my day was loading my cherished super-king sized bed into the van, driving it all the way to our new home, spending a good hour manoeuvring it up and down the stairs in a vague attempt to make it fit, standing outside debating whether going through the window might work and then eventually with tears in my eyes admitting defeat, loading it back in the van and saying goodbye to it at the tip. I can safely say a little pre-planning may not have gone a miss.

So before picking up the key from the estate agent with the Cheshire Cat smile (which will remain on their face all the way to the bank!) you may want to digest the following.

Before moving day take the opportunity to have a spring clean. I can assure you, that beloved box of treasures which you cannot live without suddenly becomes less appealing when in your new home you realise there is simply no way one more box will fit in the cupboard.

At least one week before moving contact your gas, electricity, water, internet and telephone suppliers and make the necessary arrangements for your final account. Use this as your chance to shop around make the most of those cash-back deals your friends keep raving about.

Run down the freezer….yes this does mean it is totally acceptable to eat a whole tub of Ben & Jerry’s for breakfast, after all the Trade Associations advise against moving freezers in full or frozen state. Little tip, if you overlooked this getting a hair dryer on it will speed up the defrost time. Prop open the doors to avoid having to clean mould out later on, you do not want to add another cleaning job to the list.

Decide whether you need a professional moving firm or not. If you’re thinking of moving yourself, look into the costs involved. Several journeys over long distances can quickly add up, it may well be worth hiring the professionals. Not to mention saving your blood pressure hitting dangerous levels when your mirror slips out of your brother-in-law’s hands and smashes on the floor! Check with your home and contents insurer to see if you are covered during the move.

Your best-friend on this day will be the baby/dog sitter… tripping over the dog, hearing your child ask where the lego is for the tenth time and standing on Biro will have you crying blue murder.  If this is a luxury you cannot stretch to then make sure you keep some essential favourite toys at hand to set up a make shift playroom at the other end.

Hindsight has now taught me on my next move I shall pack a ‘survival kit’ consisting of tea bags, coffee, snacks, lightbulbs, screwdrivers, tape, hammer, cash, phone charger, toilet roll, chocolate and wine (believe me the last two are essential!).

Boxes - small ones for the heavy items, big ones for the lighter items. For pictures and mirrors select a box large enough to cover it, then instead of making the box up, keep it flat, seal one end with tape and slide the picture/mirror in and then seal the top. (Advice my brother-in-law did not follow!)

Before you rush off to your new home check your old property for any items left behind, and don’t forget outdoor plant pots. Take gas, water and electricity meter readings. This should be the first thing you do at your new house too. If your old property will not be re-inhabited turn off gas, electricity and water supplies as the mains. Check windows and doors are fastened securely.  

On arrival at your new home make sure all items, fixtures and fittings that were included in the sale are present and correct. If anything is missing contact your solicitor as soon as possible.

Get your mail redirected to your new address. Knocking on your on the door of your previous residence to ask for your NEXT catalogue is a little awkward. Also cancel deliveries of newspapers milk etc.

Before you snuggle down in front of the TV make sure you have notified TV Licensing of your new address as your TV license does not automatically transfer to your home. Risking prosecution and a fine of up to £1,000 is not the ideal moving in present.  (www.tvlicensing.co.uk)

It is a legal requirement to notify the DVLA of your new address. You will need to renew your driving licence and vehicle registration. Don’t forgot to update insurance providers, credit card, pensions, investments and loyalty cards. You will need to let your children’s schools know that you are moving. Do be aware that your children might have to change schools if you are moving out of the catchment area. 

This one maybe for the slightly over cautious but change the locks on your new home… you never know who might have a key!

Finally…take a deep breath, relax, and crack open the champagne. Believe me you will have earnt it!

Estate Agents commission monopoly under attack

In my last blog I discussed the increasing gulf between the fee of the solicitor and the commission charged by the estate agent, and posed the question whether at a time when the property market remains in turmoil this could be justified.  

At about the same time news broke of an announcement by the Department for Business, Innovations and Skills (BIS) of proposed amendments to the Estate Agents Act relating to web-based 'intermediaries'.  The changes if implemented will mean  the intermediary will no longer be  treated in the same way as an agent and will  make it easier for  sellers to advertise their home online direct to buyers.

The intermediaries, such as Tepilo, run by TV property guru Sarah Beeny,Sellmyhome.co.uk and HouseSimple allow property sellers to advertise their homes online for a fixed fee far below the commission charged by estate agents. The providers of these services do not perform any other role during the sales process yet the Estate Agents Act treats them as agents and requires them to perform the same checks on properties as agents. This has made it difficult for them to compete with the likes of Rightmove through which the majority of estate agents advertise property.

If the restrictions on these businesses are relaxed it is clear that the consumer will be presented with a wider choice and fees charged by agents may begin to tumble as competition increases.  The typical fee charged by an intermediary is around £450 ( Tepilo is free).  Compare this to the commission charged by agents where commission can run to many thousands of pounds. A recent Which? report found estate agent fees range from 0.75 per cent to 2.5 per cent, with 1.8 per cent the average fee. Selling a £300,000 property on this basis would cost £5,400.

It is fair to say Estate agents clearly provide a more comprehensive service than intermediaries, including offering complaint processes and redress if needed. However any change that will help to put pressure on agents to charge a fee  that is more proportionate to their input will be welcomed.

Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk