The month in brief
Welcome to the latest issue of your Technical Update. We are now starting to see movement on the tranche of leasehold reforms that the government has put out to consultation. This month, we report on the Law Commission’s consultation into commonhold and the pledge by housebuilders to outlaw the toxic leasehold practices that have delivered such bad press to our industry.
In other news Brethertons, the platinum sponsor for our Annual Seminar (see IRPM News) offers guidance on the cladding removal conundrum facing property managers and their clients and looks in detail at the Homes Act 2018 in light of the experience of tenants at Grenfell Tower. In this month's Legal column, Mark Loveday provides his regular insight into this month’s key legal cases and our Topic of the month is proptech. Leading commentator in the sector, James Dearsley, takes a closer look at the ways property managers can get best use from this fast moving technology.
Don't forget, the Technical Update is your publication. So if there is something you would like to see published or covered in greater detail, do contact us with your news, views or queries by emailing the Editor at [email protected]
IRPM News
Speak up now on health and fire safety | First B2R property managers qualify with IRPM | Annual seminar – don’t delay, book today! | Brethertons to provide Legal Update at Annual Seminar
In the news
Who will pay for the removal and replacement of the cladding on your building? | Commonhold consultation now closed | Government backs pledge to outlaw toxic leasehold | Investing in property post-Brexit
Fire safety
Review 18m rule for cladding restrictions, urge fire experts
PRS and B2R
Brighton’s first B2R scheme gets the go-ahead | Right To Rent: how will it work post-Brexit? | TfL partners with Grainger in B2R deal | Moda to deliver Birmingham’s tallest residential building
Social housing
Councils call for ‘urgent’ funding for sprinklers | Open bidding for £3bn affordable homes scheme | Government agency launches £1.25m housing management competition | Social tenants get a voice on building safety |Rent standard for Social Housing in force from 2020
Scotland and Wales
Wales bans fees too - from the autumn | Don’t “impose” Right to Rent on Scotland, says Minister | Scotland sees 4% rise in new build completions
Legislation
The Homes Act 2018 - The Grenfell Effect?
Legal update
Mark Loveday looks at this month’s key cases
Talking point
What do you know about property guardians?
Topic of the month
Are you making proptech work for you
IRPM events
What’s happening when and where?
IRPM News
Speak up now on health and fire safety
Property managers are clearly concerned about health and fire safety issues. So what can the IRPM do to help, asks Andrew Bulmer
Your IRPM team is fresh back from a weekend learning 'boot camp' where we ran fast-track access exams for experienced but unqualified property managers. A good weekend but one thing really stood out for me; every session on health and fire safety was urgently attended by concerned property managers. Even the general “ask about anything leasehold” panel session discussions ended up 90% safety-related. Out and about, I don’t think I’ve met a member who isn’t at least slightly anxious about this stuff, and many are downright worried. That’s a good thing; it shows they are the professionals who care and want to do the right thing. But it’s a bad thing, because we need to get this sorted so folk can rest easy at nights.
Help me to help you, please. This is your professional body, so have your say. Tell me what it is you need from IRPM to help you feel safe about health and safety in your day job. How can your professional body serve you best? I want to hear personally from our individual members, as well as team leaders and owners of businesses large and small that may or may not have internal training in place already. All responses will be treated in strict confidence.
In health and fire risk management, what do you need? Just the basics; in-depth detail; legal structures and responsibilities; managing your own personal risk; managing risk in business; just fire or, across the piece, what else?
And how and when do you want it? Big conference; day workshops; local evening meetings; online learning; live webinars early doors or lunchtime; recorded webinars; videos on YouTube; personal/team sessions in your workplace; clips on your mobile phone? What works for you, and your team? Help us to help you by filling in the quick survey below.
While I am on the subject, just to update you, the Industry Response Groups that IRPM are part of are submitting their final recommendations to the Dame Judith Hackitt team at MHCLG, on how best to implement her recommendations. There will be some big changes coming and we will learn exactly what Dame Judith’s latest thinking is when she speaks at the legendary IRPM Annual Seminar this 13th June at the QEII Westminster.
Andrew Bulmer is CEO of the IRPM
To help us develop solutions that will work for you, please take a few minutes to fill in the survey below.
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First B2R property managers qualify with IRPM
We are delighted to announce that in February the first cohort of our members completed the IRPM level 4 course to qualify as build to rent professionals.
The IRPM B2R qualification was delivered in response to an approach in 2014 by the government’s PRS Task Force to develop a Level 4 qualification and associated learning material for the management of (institutional-type) build to rent residential property. The IRPM has worked closely with the property industry to ensure that the syllabus and training material are what the industry needs and we set up a working group of industry leaders to help us.
Following extensive research and development of course materials, the first cohort started the course in January 2017 and two years down the line, we are proud to see them gain their qualifications.
This is the only build to rent qualification available in the UK. The next course started in April, so if you or a colleague are interested in qualifying to work in this exciting and fast-growing sector, contact us today.
The online course is taken over two years and, providing candidates pass the on-going assessments, they will gain the IRPM Member qualification.
Candidates are required to join the IRPM (if not already a member). The fee for this structured learning course will be £475 per annum (total £950 for the two years) and the course registration fee will be £125.
Anyone who already has the Member level qualification in leasehold management, will need to do this course to qualify as a Build to Rent property manager. Everyone’s membership certificate will say whether they are qualified in ‘leasehold’ or ‘build to rent’ or both. The course overview is available here.
For more information, please contact the IRPM on [email protected] or 020 3319 7575.
Annual seminar – don’t delay, book today!
The biggest changes to residential property management in a generation will soon be upon us. New laws, new codes, new qualifications, new regulation, new best practice and more…
So if you want to stay ahead of the fast-moving developments taking place in your industry, don’t miss out on this year’s IRPM Annual Seminar, to be held at London’s QEII Conference Centre on 13 June. This ever-popular event will give you the perfect opportunity to hear the latest legal, policy and best practice updates, meet with industry specialists at the exhibition and catch up with your peers and colleagues.
This year we are pleased to announce the following speakers:
• Lord Best;
• Mark Prisk MP;
• Professor Nick Hopkins of the Law Commission;
• Roger Hardwick and Bukola Obadun-Craigs of Brethertons; and many more.
As always, our speakers will be delivering genuine thought leadership, relevant in-depth insight and practical guidance for property management professionals.
Our Platinum sponsor this year is Brethertons. Click on the links below to book your slot in one of our new Consultation Bubbles to benefit from advice and information face-to-face. Book with Brethertons and our other sponsors for 2019 who include:
- Abbatt Property Recruitment
- Barrett Corp & Harrington
- Dean Wilson LLP
- Data Energy
- 4Site
- Fixflo
- Future Group
- Seclec
If you have not purchased a ticket already, book your place to avoid disappointment. Tickets will sell out!
We look forward to seeing you in June.
Brethertons to provide Legal Update at Annual Seminar
With new laws and regulations high on all property managers agendas this year, Brethertons’ Partner and renowned residential leasehold expert Roger Hardwick and Senior Associate Bukola Obadun-Craigs will deliver the always anticipated ‘Legal Update’ at the 2019 IRPM Annual Seminar.
The talk will provide delegates with a comprehensive insight into the key legislative changes that have occurred in the past 12 months, as well as a summary of the Top 10 Legal Cases all Property Managers Should Know and understand as part of their day to day duties.
About Roger Hardwick
Roger is a regular speaker on residential leasehold property law, due to his vast experience and technical expertise. He is frequently involved in proceedings before the First-tier Tribunal (Property Chamber) and Upper Tribunal (Lands Chamber), acting primarily for landlords and managing agents in connection with service charge disputes, applications to vary leases and applications to appoint a manager. Roger was named ERMA’s Solicitor of the Year in 2017 and 2018 and Regional Professional of the Year in 2016, 2017 and 2018.
Roger has attended five advisory groups with the Law Commission to discuss their proposals to reform leasehold enfranchisement and the right to manage, respectively, prior to the issue of their consultation papers on both topics. Roger is also listed in the enfranchisement consultation paper as a member of the advisory group.
About Bukola Obadun-Craigs
Bukola is a Senior Associate specialising in property management litigation. She has practiced in the field for more than 12 years and advises on all aspects of housing law including housing management and leasehold management. Her specialisms include litigation, as well as appearances before the First Tier Tribunal, non-contentious advice on housing policy and regulatory compliance. Bukola is recognised in the Legal 500 2017 in respect of the wide range of areas in which she practices, under the umbrella of housing management litigation.
As part of Brethertons' contribution to this leading event, we are creating a number of authoritative thought leadership whitepapers for landlords, management companies, RTM companies and managing agents. To ensure you receive your free copies, subscribe to their mailing list by emailing: [email protected]. Alternatively, if you have a question for Roger or Bukola, book time with them in the Brethertons Consultation Bubble at the seminar. You can do this now on the IRPM website. We look forward to seeing you on 13th June at QEII in London.
In the news
Who will pay for the removal and replacement of cladding on your building?
In the immediate aftermath of the Grenfell Tower tragedy on 14 June 2017, the Department for Communities and Local Government (DCLG) issued written guidance on cladding testing.
The initial tests, conducted at the British Research Establishment on behalf of the DCLG, consisted of a screening test to identify which panels contained fillers (in the core of the panels), which were of limited combustibility (Category 1) and which did not (Category 2 or 3).
For those landlords, management companies, RTM companies and managing agents who manage buildings with combustible cladding and the leaseholders who live in those buildings, one question has overshadowed all others over the last 18 months: who is going to pay for the removal and replacement of the cladding?
Roger Hardwick, Brethertons Residential Leasehold Partner has written a white paper to explore the extent to which the cost of removing and replacing cladding which has been found to have no fire-retardant properties can be recovered as a service charge, under the terms of the lease.
The contents of the white paper include:
• Introduction
• Issues not covered
• General Principles
• Repair or Improvement?
• “Statutor Compliance” Clauses
• “Sweeper” Clauses
• Service Charge Mechanism
• Cases
• Conclusion
The white paper, entitled Recovering cladding costs as a service charge was released in March. If you would like to receive your free copy, email [email protected] with your name, company and email address. We will subscribe you to our property management email subscription list, but you may unsubscribe at any time. For more details on how Brethertons LLP will protect and process your personal data view our Privacy Policy.
Commonhold consultation now closed
The Law Commission consultation on commonhold reform Reinvigorating commonhold: the alternative to leasehold ownership closed on 10 March.
The commonhold project looks at aspects of the law of commonhold which may be preventing its uptake. The Commission previously published a Call for Evidence on commonhold on 22 February 2018 and the responses highlighted a number of issues around the law as it stands. These may be making this form of tenure unattractive to homeowners and across the wider property sector and were used to inform the subsequent consultation.
The Law Commission is now analysing the consultation responses and will publish a final report, and assist with the implementation of the recommendations, later in 2019. More information can be found here
In response to the government’s proposals to-date on leasehold reform, the Housing, Communities and Local Government Committee has released its own report which includes a series of recommendations including that commonhold becomes the primary model of ownership of flats in England and Wales.
Read the recommendations in full here.
Government backs pledge to outlaw toxic leasehold
A new industry pledge to stop leaseholders being trapped in unfair and costly deals was made public in March by the Communities Secretary, James Brokenshire MP (Source: Inside Housing).
More than 40 leading property developers and freeholders have signed the government-backed pledge, which commits them to outlawing toxic ‘doubling clauses’ that can result in leaseholders being charged extortionate ground rents.
The freeholders who have signed have committed to changing the terms of leases for those who are affected. Other industry bodies such as managing agents have also put their names down, vowing to act fairly and transparently in their dealings with leaseholders.
Ministers also announced plans to close the legal loopholes that force leaseholders to pay unjustified fees when they take their freeholders to court over pernicious service charges. This includes consultation with industry on whether these changes should apply to existing leases too.
The pledge has been welcomed by the housing industry, however Housing Communities and Local Government Committee Chair, Clive Betts MP is concerned that the government has “chosen to trust the developers and freeholders who created these onerous leases in the first place to decide how to make the system fair. Given the evidence we heard from leaseholders during our inquiry, we know it will be difficult for them to trust developers and freeholders to deliver on such pledges…”
In a letter to James Brokenshire, Mr Betts also voiced his concerns over the government’s approach to ground rent. “This is not about doubling ground rent alone”,he said, adding: “there are plenty of examples of RPI-based mechanisms having the same effect, particularly where ground rents increase above 0.1% of the value of a property. The Government should accept this and ensure that ground rents are capped at an affordable rate through legislation".
However, he did welcome that the Government has accepted the Committee’s recommendation to prevent freeholders from recovering their legal costs through the service charge, even when they lose. “This will go some way towards alleviating the risks to leaseholders in bringing service charge, or other, challenges to tribunal,” he said.
Investing in property post-Brexit
In 2019, one thing is on the mind of every UK investor – Brexit. There’s never been a more difficult time to predict the future of UK property prices and although political uncertainty looms over the wider property market, Seven Capital is looking ahead to how the UK will react and how international investment is set to trend during 2019. Download the full report here.
Fire safety
Review 18m rule for cladding restrictions, urge fire experts
In March, fire chiefs petitioned the government to reconsider the 18m threshold for increased fire safety measures, saying that shorter buildings are no less at risk (source: Inside Housing).
The National Fire Chiefs Council (NFCC) raised concerns about the 18m threshold in its response to the government’s recent consultation on a review of Approved Document B. In its submission the NFCC said that it sees “no justification for controlling or restricting fire spread on buildings above 18m yet providing no control below that threshold regardless of the type and vulnerability of the occupants”.
Current regulations class buildings above 18m as ‘high rise’. As such, they are subject to stronger cladding restrictions. Government legislation to ban the use of combustible materials in the external walls of residential buildings over 18m came into force in December. But the NFCC said that building regulations applied to external walls to resist the spread of fire are unrelated to a building’s height. It suggested that either the threshold be scrapped, or there should be rules set for properties below 18m that similarly require developers to use products with limited combustibility.The facades of smaller buildings should also be subject to testing for fire resistance and how it responds to smoke, NFCC said.
In February, Inside Housing revealed that a social housing tower block with Grenfell-style cladding was denied government funding for the removal of the dangerous material because it fell just 64cm short of the 18m required to qualify.
PRS and B2R
Brighton’s first B2R scheme gets the go-ahead
Legal & General is to develop a Brighton industrial estate into the town’s first B2R scheme according to Letting Agent Today. The redevelopment of the former Longley Industrial Estate site will be Legal & General’s eleventh scheme since entering the BTR sector in 2016. The development will also deliver 3,270 square metres of commercial space, to accommodate either a single occupier or arranged as incubator space to support start-ups and SMEs.
Right To Rent: how will it work post-Brexit?
The Association of Residential Letting Agents (ARLA) has asked the government for clear guidance on how Right To Rent will work post-Brexit. As this issue of Technical Update goes to press, Britain is due to leave the EU in just 10 days’ time, leaving letting agents and landlords to take responsibility for control of migrants who may not be entitled to rent in this country.
A recent letter received from Immigration Minister Caroline Nokes and reported in Letting Agent Today, appears to make no reference to post-Brexit controls but does say that Right To Rent continues as before - at least for now - despite a recent court ruling.
The High Court recently ruled that the scheme, introduced in 2014, is incompatible with human rights legislation. However, the government has told ARLA that it is appealing the decision and until that case is decided, the Right To Rent checks continue.
TfL partners with Grainger in B2R deal
Transport for London (TfL) and Grainger plan to develop more than 3,000 new homes together across eight sites owned by TfL in London (source: The Construction Index). They promise a minimum of 40% affordable homes on all new planning consents, and the remainder will be predominantly built for the private rental market. The partnership is 51% owned by Grainger, and 40% by TfL.
Grainger is the UK's largest listed residential landlord, with more than 8,200 operational rental homes.
The eight sites in the first phase of development are:
- Limmo Peninsula, Canning Town, Newham (potential for up to 1,500 homes)
- Southall Sidings, Ealing (potential for up to 400 homes)
- Nine Elms tube station, Lambeth (potential for up to 400 homes)
- Armourers Court, Woolwich, Greenwich (potential for up to 400 homes)
- Hounslow West tube station, Hounslow (potential for up to 350 homes)
- Cockfosters tube station, Enfield (potential for up to 300 homes)
- Arnos Grove tube station, Enfield (potential for up to 100 homes)
- Montford Place, Kennington, Lambeth (potential for up to 100 homes)
Work has started on the early stages of the planning application process for some of the schemes.
Moda to deliver Birmingham’s tallest residential building
Leading B2R developer Moda, backed by JV partner Apache Capital, has appointed John Sisk & Son to deliver a new 42-storey skyscraper in Birmingham, which will be the city’s tallest residential building.
The 483-apartment scheme will be exclusively for rent, offering hotel level service and on-site amenities including a 200m podium running track.
The £183m project will transform the derelict site of the former Click Club at Burberries, which hosted bands such as Blur and Primal Scream, and underpins the regeneration of the Broad Street area. Work is due to start in April this year, with completion expected in 2022.
Social housing
Councils call for ‘urgent’ funding for sprinklers
A letter to the prime minister urgently requesting funding to retrofit sprinkler systems in their tower blocks has been delivered by a group of 14 councils (source: Inside Housing).
Sharon Thompson, cabinet member for homes and neighbourhoods at Birmingham City Council, wrote and delivered the letter, urging the government to pay for the installation of sprinklers in blocks over 18m for housing associations and councils.
The letter was also signed by representatives from Croydon, Leeds, Newcastle, Bristol, Nottingham, Sheffield, Liverpool, Manchester, Solihull, Wolverhampton, Dudley, Coventry and Sandwell councils, as well as the Greater London Authority.
Open bidding for £3bn affordable homes scheme
The government is to launch an open bidding process to find the company to run the £3bn Affordable Homes Guarantees Scheme announced in the Chancellor’s Spring Statement (source: Inside Housing).
A spokesperson for the Ministry of Housing, Communities and Local Government (MHCLG) said a procurement process to choose a delivery partner “will take place soon”.
The scheme, which chancellor Philip Hammond said will deliver 30,000 affordable homes, involves the government agreeing to stand behind housing association bonds, promising to repay them in the unlikely event of default.
It follows a previous scheme scrapped in 2015 by then-chancellor George Osborne, under which the government guaranteed a total of £3.2bn of housing association debt.
Government agency launches £1.25m housing management competition
A government agency is launching a competition to come up with ideas to improve people’s health through new methods of housing management, says Inside Housing.
The best models will be awarded a share of £1.25m funding from Leeds City Council and City of York Council to develop the projects. Up to five projects requiring up to £50,000 are expected to be funded in the first phase of the programme.
Guidance on the application process has been published on the government website. The competition opens on 1 April with registration required by 8 May.
Social tenants get a voice on building safety
A new government-backed group will give social landlords and their residents the chance to improve tenant engagement over fire and building safety. The government launched the Social Sector (Building Safety) Engagement Best Practice Group in March and eight social landlords.
These include Clarion, Optivo, Chelmer Housing Partnership and Phoenix Community Housing together with Sheffield City and Stockport Homes.
One resident from each social landlord will attend a monthly meeting which will agree and pilot initiatives across the housing providers in order to ensure residents are better informed and have a greater say in work carried out to improve safety. The group will report to government after six months. Its findings will be used to shape future policy on tenant engagement.
Rent standard for Social Housing in force from 2020
Last September, the MCHLG published a consultation on a new rent standard for social housing. Government proposals included allowing registered providers to increase rents annually by up to CPI+1% and that this cap should also apply to local authorities. There were more than 150 responses with the majority agreeing with both proposals. As a result, a direction was issued requiring the Regulator of Social Housing to introduce a new standard with effect from 1 April 2020. The government has now published an analysis of the consultation responses which is available at here
Scotland and Wales
Wales bans fees too - from the autumn
The Renting Homes (Fees etc) (Wales) Bill completed its passage through the Welsh Assembly in March (source: Letting Agent Today). The Bill will receive Royal Assent in the coming weeks, before being passed into law and implemented in the autumn.
The Bill has similar policies to those of the Tenant Fees Act coming to force in England in June and also includes powers to cap both types of deposit.
Breaches could result in a £500 fixed penalty, or unlimited fines, and the risk of being banned from the compulsory licensing system enshrined in the Rent Smart Wales scheme. In response, ARLA has called for members in Wales to continue with their preparations for a post-tenant fees world.
Don’t “impose” Right to Rent on Scotland, says Minister
Concerns over the roll-out of the UK Government’s Right to Rent scheme north of the Scottish border have once again been raised by Housing Minister Kevin Stewart in light of the recent High Court ruling that it flouted human rights laws.
In response to the ruling, Mr Stewart has written to the Minister of State for Immigration, Caroline Nokes, asking for a meeting to discuss the UK Government’s intentions regarding Right to Rent in Scotland.
He said: “The High Court ruling is one we welcome, as this is a policy we do not want imposed on Scotland. I’m now seeking clarification from the Minister on her future plans and hope she will pay attention to the ruling and end Right to Rent.”
Scotland sees 4% rise in new build completions
According to the latest Quarterly Housing Statistics for Scotland, there were 18,750 new build homes completed across all sectors over the year ending September 2018. This is an increase of 4%, or 635 homes, on the previous year.
The 4% rise included increases in housing association completions (35% or 887 homes) and local authority completions (8% or 116 homes), while private-led completions fell by 368 homes (3%).The total number of social sector completions (housing association and local authority starts combined) increased by 1,003 homes (26%).
There were 19,900 all sector new build starts in the 12 months ending September 2018, a figure which is 1,150 homes (6%) higher than the number of completions in the same period, and which is an increase of 407 homes (2%) on the 19,493 starts in the previous year.
Private-led starts fell by 397 homes (3%) whereas housing association approvals increased by 120 homes (3%), and local authority starts increased by 684 homes (62%). The total number of social sector starts (housing association and local authority starts combined) increased by 804 homes (14%).
Legislation
The Homes Act 2018 - The Grenfell Effect?
Kirsten Taylor takes a closer look at the Homes (Fitness for Habitation) Act 2018, which came into force in March
The Homes (Fitness for Human Habitation) Act 2018 is a prime example of a piece of legislation which has been in the pipeline for some time but which has been overtaken by events.
In this particular case, it would appear that the tragic circumstances of the Grenfell Tower disaster has acted as a catalyst for the bill’s parliamentary progression, receiving Royal Assent on 20 December 2018 and coming into force on 20 March 2019. So what does the Act say and what are the implications for landlords and their tenants?
It is important to note that the Act applies to property conditions for tenants in both the public and private rented sector. The Act implies a covenant into all applicable leases (defined within the Act) that the property being let is to be:
“(a) Fit for human habitation at the time the lease is granted or otherwise created or, if later, at the beginning of the term of the lease; and
(b)Will remain fit for human habitation during the terms of the lease.”
The overarching principle of the Act is to improve health and safety standards in rented properties by placing an obligation on landlords to keep their properties “Fit for Human Habitation”.
The Act also provides tenants with explicit recourse to take legal action where either private or social landlords breach the implied covenant.
The Act seeks to clarify, refresh and revive s.10 of The Landlord and Tenant Act 1985 by updating the concept of “fitness”. The previous factors (facilities for cooking, etc) were last revisited in the 1950s and the Act updates the relevant factors to include the modern approach to “fitness” in the Housing Health and Safety Rating System (Pt.1, Housing Act 2004).
So how will the Act improve the current legal position for landlords and tenants? Section 9A (5) of the Act states that the Court will have the power to order specific performance in circumstances where it is determined that a home is not fit for human habitation for one or more reasons. In this situation, the legal recourse is made clear for both landlords and tenants.
The significance of this provision cannot be undermined. The current process for private tenants is to seek redress through Environmental Health Teams who use the Housing Health and Safety Rating System to identify hazards. It will not come as a surprise for readers to learn that this is a public service which cannot currently keep up with rising demand. The ability for tenants to initiate proceedings without needing to obtain an Improvement Notice, Emergency Prohibition Orders or Hazard Awareness Notices will inevitably reduce the reliance on these public sector teams, while also cutting out a sometimes unnecessary middleman in applicable circumstances.
Section 9A (5) arguably provides an even bigger breakthrough for social tenants. The Act gives these tenants the opportunity to take matters into their own hands should the local authority/housing association fail to act following the relevant internal procedure.
If we take Grenfell Tower as an example, it is widely documented that the tenants had repeatedly communicated safety concerns but as their complaints are often directed to the same body that is responsible for rectifying the breaches, inevitably they felt once these issues had been raised they had no further options in terms of resolution.
Section 9A(6) of the Act confirms to landlords and tenants alike that in circumstances where a landlord or lessor’s interest in a home includes any of the common parts of the building, their duties in respect of “fitness for human habitation” extends to these parts. Again, many of the issues complained of by the Grenfell residents concerned communal areas, particularly in relation to fire safety. Therefore this section is going to represent both clarity for landlords seeking to ascertain their responsibilities and peace of mind for tenants.
So while it was widely recognised that the “fitness for human habitation” provision and the way in which it could be enforced needed to be refined and clarified, it would seem that the Grenfell tragedy has provided a reactive platform for this to occur. Although, there is still a long way to go in the inquiry itself, it is certainly clear that the lessons learnt from Grenfell are already permeating through housing law reform.
If you would like further advice on the new Act, please contact the Brethertons Residential Leasehold team.
Kirsten Taylor is a chartered legal executive with Brethertons.
Legal update
LB Southwark v Baharier [2018]
Mark Loveday looks at a recent case that illustrates the problem of determining whether works constitute ‘repair’ or ‘improvement’ and whether or not they can be recovered via the service charge.
This month’s case in LB Southwark v Baharier [2018] UKUT 0073 (LC), heard by Martin Rodger QC on 9 January 2019 concerned a block of flats in Southwark served by a communal central heating and hot water system. The leases of the flats contained a covenant to provide heating and hot water as well as a covenant to “repair” the installations connected with the provision of those services. The local authority landlord replaced the original worn out system and sought to recover the costs of doing so through the service charge.
The Upper Tribunal considered the landlord’s obligation under a covenant to provide services and noted the following:
- The obligation to provide heating and hot water “imposes a wider and potentially more onerous obligation” than a covenant to repair;
- Because such a covenant imposes an obligation “to take whatever steps are required to achieve an outcome, it is not relevant to consider in any detail what those steps are”. The distinction between repairs and improvements was therefore irrelevant;
- Even though there was also a covenant to keep the installations in repair, the landlord was obliged to take additional steps to meet its obligation to provide the service. “It is the service which is to be maintained, not the installations by which it is provided”.
- The lease had been entered into when the building was already 40 years old. The parties could not have intended the heating system would not be replaced during the life of the lease, or that the landlord should do so at its own expense.
The F-tT had therefore erred in considering solely whether the works were a repair or an improvement. The relevant question was whether the cost of the works was “of or incidental to providing the services” and the Landlord’s appeal succeeded on the first ground.
Why is this case helpful?
Many leases expressly allow landlords to recover the cost of repairs, but not improvements. But when considering major works projects, it’s not just a bilateral legal question of repairs v improvements. If the landlord has to provide a service, it may also be able to carry out major works necessary to provide that service, and still recover the cost through the service charge.
Other must-read cases
Rotenberg v Point West GR Ltd [2019]UKUT 0068 (LC).
Service Charges – application to which 399 leaseholders were named as respondents – 277 members of leaseholders’ association represented by one firm of solicitors – application under section 20C Landlord and Tenant Act 1985 in respect of part of proceedings in which leaseholders were substantially successful to the tune of £340,00 - appeal allowed and s.20C order made.
Mark Loveday is a leading Barrister with Tanfield Chambers specialising in leasehold management and enfranchisement work
Go to the Resource Hub for more case law. This section is updated on a regular basis.
Talking point
What do you know about property guardians?
Property guardianship is an unusual form of tenure which is growing in popularity – and poses its own property management challenges but how much do you know about it?
There are an estimated 7,000 - 10,000 property guardians across the UK and the sector is growing. Property guardians live in properties for landlords to help ensure they are well-maintained and kept secure. In turn, they save up to 50-60% on housing costs in comparison to the rental market.
Dex Property Management is celebrating a decade of helping landlords and freeholders ensure vacant buildings are secure and protected by using property guardians. The London-based company has both commercial and residential properties in its portfolio and has helped local authorities, dioceses, and NHS Trusts make use of vacant properties and Dex now works with more than 50% of the G15 housing associations.While guardianship is predominantly short-term, the longest guardianship under DEX’s management was a five-year stay in two unused mental health units. Over the five year period, the empty space allowed 110 guardians to live in affordable accommodation.
Using guardians throws up a range of property management issues that are a little different to those faced by managing agents working in the residential block sector. Property guardianship can be applied to a wide range of buildings as long as the property has basic facilities, electricity and water. The property also needs to be wind and water tight. As DEX also manages non-residential buildings, in some cases the company will install temporary facilities to ensure they are fit for habitation, often at zero cost to the property owner. These can include shower pods and portable cooking appliances etc. These are all temporary and will be removed before the property is returned.
Whether the property is commercial or residential, DEX will visit the site of the property and prepare a bespoke property proposal detailing any work that needs to be done in order to make it habitable for guardians. DEX’s in house maintenance teams will ensure the work is implemented to a high standard. Once DEX is satisfied with the property, guardians will be invited to live in the building. In the majority of instances, DEX can have a property fit for Guardians to move in within just 10 days.
Who is responsible for maintenance?
DEX is responsible for day-to-day and reactive maintenance of the property while it is in their care. The company has an in-house maintenance team on-hand and, where necessary, utilises approved contractors to carry out specialist work with the client’s permission. As well as offering ongoing maintenance as required, all buildings and spaces are inspected regularly. The property guardian service includes monthly inspections and guardians are given regular detailed reports on their property.
Health and safety
All properties meet strict health and safety requirements before guardians move in. Properties will all have the correct and required certification including gas, electrical and fire panel certificates. In addition all properties will have passed a fire risk assessment. Before guardians move in, they are given Guardian Guidelines which they must read and sign. All guardians will also be given their own fire safety kit.
What are the conditions of occupancy?
Guardians sign a licence to occupy agreement. The key difference is that under a licence agreement, both parties can terminate the agreement with 28 days’ notice. Whereas an AST is often for a fixed period, a licence to occupy is normally a rolling contract.
Find out more
DEX is one of the founding members of the PGPA (Property Guardian Providers Association). The association advocates and supports the health and safety of property guardians. If you have clients on your books with empty properties that could benefit from property guardianship, you can find out more on the PGPA website.
Topic of the month
Are you making PropTech work for you?
Proptech specialist James Dearsley takes a closer lok at the ways proptech is now impacting property management
Property Management is an industry which requires the utmost efficiency and continuous problem solving. This creates a strong split in responsibilities for professionals, between repetitive administration tasks and unpredictable, realtime requests for action. If that wasn’t enough, property managers also bear a profound responsibility to constantly comply with complex legislation and regulation.
As such, facilities management is proving a unique undertaking for PropTech. How can technology best be applied to this industry when there is so much variety demanded in executing the role successfully?
Perhaps the best way to understand how technology is being applied to this sector is to break it down into three key areas of interest, explaining how, and looking at why, technology is helping improve and modernise facilities management for the benefit of all stakeholders.
Efficiency
Efficiency is key to successful property management. Tasks must be completed accurately and in a timely manner. And in a fast-paced world, tenants are increasingly expectant of efficient service.
One method that PropTech has developed for increasing efficiency is to give more control and power to the tenants themselves. This idea of making them an integral part of the ongoing management process is proving a great way to increase workflow efficiency.
For example, FixFlo is a an example of a PropTech company working to streamline and add transparency to the processes of reporting and resolving maintenance issues. Their entire model is structured around a tenant-facing app from which tenants can report maintenance issues instantaneously and directly to the property manager. The app then enables the manager to immediately action a resolution and inform the tenant of such. This level of efficiency is incredibly useful when it comes to maintaining positive tenant sentiment.
Automation technology, powered by Artificial Intelligence and Machine Learning (the process of computers learning to perform repetitive tasks and constantly improve by repeating each task time and time again) is becoming increasingly common in property management.
Essentially, automation negates the need for a human to complete those repetitive yet essential daily admin tasks such as paying invoices, taking bookings, and stakeholder communication. With software handling all of this, the theory is that the manager is freed up to do other jobs, specifically those which require an attentive human touch.
An ongoing debate in PropTech - and indeed across industries of all kinds – is how much of our work should we be delegating to computers? Just because we can, does that always mean we should?
The truth of the matter is that computers don’t make mistakes like we mere mortals do. As such, they help reduce the risk of human-error, and operate with far greater speed than we can. Technology must not, however, become a substitute for the real life property manager, who will always be required for all critical thinking and tenant experience issues. The digital transformation is not eliminating the role, simply redefining what the role is.
Profitability
Increased profitability is often a direct benefit of improved efficiency, but there are also PropTech solutions aimed directly at cutting costs and driving revenue. Energy usage and utility costs is a prime example.
Companies like Disruptive Technologies are using smart technology and advanced sensors to provide insight into energy efficiency, among many other incredible things. Their sensors can simply be stuck onto the wall and they will proceed to provide real time insight into where your property is most wasteful with its energy. You will then be provided with a series of ways in which you might address the issue, with each solution graded on its benefit and risk factors.
Profitability is also being driven by management platforms which not only help with the practical processes of the role, but are also integrated with third-party service providers from whom tenants can benefit. These providers can be in the property itself or in the local area, such as cafes, gyms, or laundry services; or they could be external providers of taxis, bike hire, car sharing, etc. The point is, these service providers are partnering with the property management for mutual gain - if the taxi company makes money through bookings made on the property management platform, the manager is entitled to a cut. There’s a great platform from Germany, now with offices in London, called Allthings which offers this sort of opportunity.
Accountability
Finally, and in many ways most important, accountability is a vital focus of today’s technology. In the aftermath of the Grenfell Tower disaster, accountability and compliance are under increased scrutiny. Technology has the ability to help ensure compliance at all times and across the board, using a variety of technologies and innovations.
Paperwork and safety checks can now be fully automated to ensure nothing gets missed, delayed or completed incorrectly. What’s more, such platforms provide full audit trails of your processes. With every activity accurately timestamped, securely stored and completely protected from fraudulent tampering, technology can now act as a vital back-up for legislative compliance, always doing what needs to be done and offering hard proof of its completion.
You can find a full list of PropTech companies working in property management on our dedicated page at Unissu.
James Dearsley is a proptech specialist and co-founder of Unissu
IRPM events
Diary dates are available here
17 April 2019 - Member Exam Workshop - London
09 May 2019 - Member Exam in London & Birmingham
13 June 2019 - Annual Seminar
14 August 2019 - Associate Exam Workshop - London
15 August 2019 - Associate Exam Workshop - London
11 September 2019 - Associate Exam in London & Birmingham
25 September 2019 - Member Exam in Glasgow
26 September 2019 - AGM 2019
26 September 2019 - Fellows Day 2019
