How Not to Buy a House

Earlier in the year, I sold my house. As you may remember I marketed it through an online estate agents and was pleased with the results. That was back in June. I decided not to buy in London immediately because I wanted to invest some money into small scale property development and didn’t want to tie up all my capital. I did however fall for a property in Rye, East Sussex which had two shops attached to it and would be a wonderful place for holidays and to rent out as a holiday let. So the property would pay for itself and I would get the added bonus of being able to enjoy it myself.

High St Rye

I put my offer in and it was accepted. That was in April. I booked my surveyor and almost from the very moment I started to follow the normal process of buying a property in the UK, I encountered issues. The survey had to be done by someone who also specialised in commercial property, because of the shops. Surveyors are cautious people – they give you every possible worst case scenario and you as the prospective owner have to decide which bits scare you and which bits don’t. He expressed concern about several areas – the shop windows, damp in the cellar and about the building being on a hillside. So, I booked a structural engineer to report on the hillside behind the property (the garden was on terraces below the building). He was happy that there was no evident subsidence or land slip but expressed concern about the open cellar (mentioned by the surveyor) to the building called the Undercroft and suggested it might be caused by the drains. So, I booked a drain survey. He expressed concern about a blockage to one of the drains. I asked the owners if they would get the drains jetted. NO.

undercroft arch

cracking to undercroft

Before I go any further I should say that the house is a listed building. It was built in 1580 and remodelled in the mid nineteenth century, so the street frontage is Victorian. That didn’t worry me particularly but the idea that the drains were possibly affecting the cellar that supported the building did. Especially since the current owners had done extensive refurbishment in 2010-12. So this was a sticky issue for a bit. But then early in July, my solicitor threw in the curve ball – the leases on the shops were irregular, old fashioned and the tenants had a protected tenure under the 1954 property act. To make matters worse they were new leases, one was only signed a week after my offer was accepted.

stairs to loft

All of a sudden my legal team grew and I was called in for a meeting to explain exactly what the pitfalls of these leases could be. Lawyers are risk averse, they want you to make an informed decision because let’s face it, buying a property is a big investment. So, the partner specialising in litigation explained that the 1954 property act was written to help tenants who were setting up businesses (after the war) to be able to establish themselves in a community and to be able to rely on the premises becoming part of their identity in that community. It was a way of offering stability at a time when life was fragile and so the 1954 act protected tenants by offering them an automatic right of renewal of their lease when the term ended. In 1954 that was good for business. In 2016 it isn’t. I was potentially buying a property with two tenants who had an automatic right of renewal to their leases at the end of every term of that lease. And as there was no rent review in the leases either, at the same rent. In theory that would be fine if everyone were happy, because no-one wants an empty rental unit, right? But the minute there was a problem (like rents not being at market value) these leases would be a noose around my neck because I would have to compensate the tenants – or take legal advice to rewrite the leases so that they were no longer protected tenants. Either way I would have to pay.

front bedroom

According to the estate agents – who had written one of these leases – there was no intention for the tenants to have protected tenure and they suggested that the owners might be amenable to re-issuing the leases. So I asked the owners if they would terminate the current ones that my lawyers were so concerned about and arrange with their tenants to enter into unprotected leases. Initially they said NO. And that I thought was that. But then they came back and said ‘alright.’ And this is where it got really tricky. One of the points of my survey was the repair of the shop windows, he felt they needed immediate attention, but under the terms of the leases, the decorative repair of the windows was the responsibility of the tenants – and it hadn’t been done. How was I, as new owner, to get my brand new tenants to undertake repairs to the windows (because my surveyor suggested it should be done before the winter) when they likely had made no provision for the expense?

shop 1

The problem with taking over leases that you weren’t party to is that they are likely not to suit your idea of how you want things done. I could make no changes after these leases were re-issued until the term ended in two or three years. And that to me seemed like a long time to have to wait to get things done – or to interact as landlord with my tenants. So I asked if we could add a clause to the leases (that were in the process of being rewritten) that would work as a service charge – payments that the tenants already made coming to me for me to administer as owner of the property. That way I could keep the maintenance of the building on track; wouldn’t that be of benefit to the tenants as well? This idea went down very badly. Not only was it a NO, it was a ‘we don’t do things this way in Rye’ NO.

view to the rear

I took advice – from my lawyers who really were only able to say ‘the owners aren’t obliged to do this. When you buy a house you buy it as you find it, the leases are the same.’ I spoke to a dear friend who is a property law lecturer – who said ‘do the tenants have their own independent legal advisors? Even though they’ve agreed to give up the current leases (with protected tenure) and go to unprotected leases, without the rubber stamp of a lawyer, they can come back at any time and say “we were misinformed” and you would have to compensate them for that because you would be the owner.’ And then I spoke to my Dad (who worked in property for 50 years) who said ‘you’re doing too much running around. You’re the buyer, they should be trying to convince you it’s a good buy. Personally if they won’t include the maintenance clause, walk away.’

So, what would you do?

We Need to Put Some Love In

For those of you who get my Facebook feed, you’ll know I had a holiday in Italy earlier this summer. Verona, to be precise and it was wonderful – I already want to go again. We visited Venice too and although I posted a few pictures I didn’t tell you the whole story – about how shocked I was to see how run down the city is, about how heartbroken I felt to see this gem crumbling before my eyes. I was last there 25 years ago and it has held a special place in my heart ever since. So much so that I wanted to go there for my birthday last year – I’m so pleased I didn’t, it would have ruined my day.

We’ve all heard the stories about ‘how Venice is sinking’ and yes it is, a couple of millimetres per year. But that isn’t what I’m talking about. I’m talking about the buildings crumbling from the rooftops down.

Campo San Polo

Plaster falling off walls, lintels cracking and exposed brickwork being left to the punishment of the elements. We all know how harsh sea air can be – salt water carried at high speed by gale force winds will have the same effect as a jet wash or a water canon. This is a city at risk from the elements but rising tides aren’t the only story, the neglect in areas that don’t face the sea is almost more pronounced.

Venice pathway

Venetian piazza

And where are the people? Where are the homeowners, the live blood of the city? Is it all just for tourists? My heart breaks; how can this wonderful, charming, seductive city have become a ghost town? Our hosts in Verona asked how we had enjoyed our day in Venice and I blurted out how shocked I was. Their reply, though understandable, doesn’t make it right: the taxes are so high no-one can afford to live there, the people who do buy homes there only come for holidays and do nothing to maintain the building the rest of the year, the politicians can’t agree on which action to take and because they want to be popular with the voters, they choose to do nothing, the city is so full of tourists that to get any work done is difficult because everything has to come in and out by barge – and it costs too much, so it becomes mired in apathy. And the clincher, Italy has so many World Heritage Sites that all need to be maintained, how can you choose which ones get the money? Oh my God. There was nothing I could say.

Venice canal

I spoke to another Italian friend who lives in England and he was of the opinion that in true Italian fashion, the minute it looks like Venice will fall into to the sea, it will be saved. A bit of drama and a bit of attention, whipped up to a frenzy and it’ll all be fixed. But why does it have to get to that stage before anything will be done? The tourist areas in Venice are hell, congestion has a totally different meaning there, the alleys leading to the main Piazzas are so crowded, you’re literally queuing to get into the squares, there are bins of overflowing rubbish and the canals can be smelly, drainage is obviously an issue. And don’t even try to use the mapping on your phone – too many people, too many buildings. But these areas – San Marco, La Fenice do get funding and have been restored beautifully. At the moment the Rialto Bridge is undergoing a facelift of the most comprehensive kind. But it’s not enough, for a city to have a soul – and to be cared for – people need to live there. Their identity and lifestyle need to resonate with the tempo of their community. Without that neglect happens, decay sets in, apathy becomes a state of mind and history is allowed to crumble – just fall into the sea.

Venice canal 2

I’ve done a bit of reading since I got home and there have been huge building programmes to create sea defences that will control the winter tides following the same principles as the Thames barriers. It was all supposed to go live last year – but then the Chief Executive was found to have his fingers in the pot and was prosecuted. The programme came to a halt and I don’t know if it was ever finished. As the article says, at a cost of 5.4bn Euros, it has to be finished!

Grand Canal

But what about the architecture? If the foundations can be saved with the sea defences – when they actually do get finished – who is going to give the residential buildings of the city a second chance? Who is going to encourage inhabitants to come back and make their homes in Venice once again? It isn’t a theme park but unless the tides turn, Venice runs the risk of being shut permanently and not just for the winter.

Grand Canal 2