The month in brief
Welcome to the combined August and September issue of the Technical Update. Since our last edition, we have a new Prime Minister, a possible General Election on the cards, a new Housing Ombudsman and, for the seventeenth time since 2000, a new Housing Minister. So what else is new?
Key stories this time round include how to access the government’s ACM cladding fund; new funding to protect more homes from flooding and the new leaseholder learning platform from LEASE which has had key input from the IRPM.
We also take a look at why changes to leasehold tenure are now thought to be “inevitable”; signpost the latest developments in the private rented sector for those of you working in the PRS; and flag up IRPM diary dates for the coming months.
Mark Loveday provides his regular Legal update and in our Defects database, Ed Lewis takes a closer look at cavity walls. Talking Points focus on planning for a no-deal Brexit and electric vehicle charging. Our Topic of the month focuses on ownership of block roofs and airspaces. And finally, don’t forget to sign up for one of this autumn’s IRPM Regional Seminars – tickets are selling fast
As always, you can contact us with your news, views or queries by emailing the Editor at [email protected]
IRPM News
CEO’s Column | Regional seminars – buy your tickets today | Annual seminar 2020 - save the date | IRPM partners with LEASE to develop new leaseholder learning platform
In the News
£2.9 million extra funding to protect homes from flooding | Esther McVey is named seventeenth Housing Minister in less than 20 years | ACM cladding fund – how to claim | Richard Blakeway is new Housing Ombudsman
Leasehold/block management
Developer under pressure to scrap leasehold homes | Leasehold reform now ‘inevitable’ claims ALEP director | Property management sector “ripe for disruption” says AI investor | Government urged to fully fund HPL cladding removal by leaseholders
PRS and B2R
Is focus on home ownership unfair to tenants? | Landlord bodies to join forces
Scotland and Wales
Strengthening fire safety and building standards in Scotland | Welsh housing association launches private sector leasing campaign | Tenant fees ban now in force in Wales
Fire safety
Fit sprinklers in all buildings that house ‘vulnerable people’, urges MP | London tenants call for end to ‘stay put’ policy
Legislation
Make court reform “a matter of urgency” say landlords | A new deal for renting: consultation ends in October
Legal update
Mark Loveday looks at this month’s key case
Talking points
What can managing agents do to prepare for a ‘no-deal’ Brexit? | More funding for on-street EV charging but no help for flat owners
Topic of the month
Who owns your roof and the airspace above it? Mark Chick takes a closer look.
Defects database
How much do you know about cavity walls?
IRPM events
What is happening, when and where?
IRPM News
Andrew Bulmer flags up a thorny issue that could have important implications for managing agents
Welcome back! Holidays are done, schools are back, traffic has returned, autumn is on the horizon. Time to knuckle down and get stuff done.
Not in Parliament however, where our leaders and representatives are tied up with Brexit and power games. So, the expectation of new legislation from MHCLG, Hackitt Review and Law Commission projects needs some managing. When the music stops, whoever is left leading the country and what they will do with all those projects remains to be seen. They could be fast-tracked to glory or cast aside without a second thought.
What will be will be, but in the meantime, we have another problem. One that could be about to get bigger. One to watch.
Flats in tall buildings with cladding are hitting sales problems, as lenders seek and often fail to receive assurances that the cladding is safe. If the buyer can’t get a mortgage, the seller can’t sell. And if they can’t sell, what of the mortgage security on the other flats in the building? Speculators with cash are bidding low on vulnerable sellers who need to move on. Consumer harm is occurring. So far, so bad. But stand by, because maybe, just maybe, this is about to get a lot more complicated.
As we reported in the Technical Update back in May, Hyde HA did Type 4 Fire Risk Assessments on all 86 of their tall buildings (the invasive type of FRA where they knock holes in walls and ceilings to check how the building is constructed). Every single building failed. Some had minor issues, some had very serious failings on fire compartmentation between units. They are now working overtime to remedy the problems.
But what happens if a private leasehold building seriously fails a Type 4 FRA? Just as with cladding, who pays to fix it? Freeholders, leaseholders, builders?
Knowing that Hyde had a 100% failure rate and that leading agents are carrying out Type 4s on selected buildings and are also finding serious failings, should you be doing Type 4s on your tall buildings too? It is expensive and invasive and time consuming. But even so, should you take that extra step to check your buildings are properly built and safe?
And if you do, and it isn’t safe, have you the time and resources to manage that situation? Frankly, I doubt it. Maybe for a building or two, but not if you have multiple failures. This sort of problem solving is very complex (customer engagement, process, probably tribunal and/or litigation) and it burns time and resources at a frightening rate.
Disregarding the moral question of “what is the right thing to do?”, could you be forced to Type 4 your tall buildings? Maybe even all your buildings? Barking was under 18m. All it would need would be an instruction from the Government, though they are busy just now. But the lenders could drive this. If they start asking for a certificate for the safety of the whole building rather than just the cladding, that might do it. Could that happen? I don’t know, but it is a definite possibility.
Agents can’t absorb the burden of making good the shoddy work of an entire construction industry, refurbishing a chunk of the UK housing stock as part of business as usual. The extra work will have to be paid for and that will have to be part of the solution for each building. It’s time to check your terms of business for carrying out extra work and think about assembling your building surveyor/risk assessment/contractor/legal team. To start thinking now about how you might deal with this. And that will need to include engaging and working with the residents as part of the solution.
Of course, it might never happen. But he who pays the piper calls the tune. Don’t forget, the lenders broke the escalating ground rents before Government got to it. The lenders are the ones blocking sales right now on clad buildings. As I said, one to watch. IRPM is working with lenders and government and you will be the first to know. Stay tuned.
Andrew Bulmer is IRPM CEO
Regional seminars – tickets selling fast
Tickets are selling fast for our autumn series of regional seminars to be held around the country in September and October.
There are five to choose from and the dates are:
- Bristol – 17 September
- Manchester – 2 October
- Southampton – 10 October
- Birmingham – 22 October
- London – 29 October
This ever-popular series of seminars will help provide you with the knowledge and professional tools you need will enable you to maximise your personal potential. Also, don’t forget that attending one of the seminars counts towards your CPD.
Each event features expert speakers giving safety, legal and industry updates as well as keeping you in touch with your IRPM. There will also be practical workshops giving you the chance to pit your wits – and your management skills - against your peers. Our seminars are always informative, extremely good value for money and give you a great opportunity to network with your fellow property managers in your local area.
This year's speakers include fire and safety expert Shaune Lundy; Roger Hardwick and Bukola Obadun-Craigs from Brethertons and Cassandra Zanelli from PM Legal Services delivering our ever-popular legal updates; Andrew Bulmer and Kevin Fairless from the IRPM; and Zoe Stockwell from Block Recruit.
The IRPM Regional Seminars start at 9.30 and finish around 4.30. Tickets are just £89 for IRPM members (Affiliates, Associates, Members, Fellows). Our seminars are also open to non-members for £150. So why not bring your colleague who is not a member? It will be a great opportunity for them to find out what we do!
So don’t miss out, book your place now as some dates have almost sold out. Tickets are great value, priced at £89 for IRPM members and £150 for non-members.
Look out for updates on our event website in the coming weeks.
Annual seminar 2020 – save the date
We’ve got a date for next year’s Annual Seminar. This year’s Seminar sold out six weeks before the event, so don’t miss out next time. The 2020 IRPM Annual Seminar will be held once again at the QEII Conference Centre in Westminster, London, SW1P 3EE, on 21 May 2020. Tickets will be on sale soon – so watch this space for updates.
IRPM partners with LEASE to develop new leaseholder learning platform
Do you ever think "It would help me if my customers understood a bit more about how leasehold works"? If so, this might be of interest to you. The Leasehold Advisory Service (LEASE) has launched ‘LEASE Learn’, a free e-learning platform for leaseholders looking to manage their own building using their own company.
Managing your own building can give you control over repairs and maintenance, but it can also be complicated and stressful. So with input from the IRPM, as well as FPRA and ARMA, LEASE has produced the new tool to help flat owners get their head around the complex issues thrown up by leasehold blocks.
IRPM CEO Andrew Bulmer believes the launch is perfectly timed, as the duties and responsibilities of resident management company directors are being brought into sharp focus as leasehold tenure and building safety management is reformed. “IRPM is delighted to support this useful e-learning programme,” he says. “Beyond just the directors, we would go further and recommend that all members/shareholders/residents of a management company benefit from this course.”
If you think your residents would benefit from the free course, they can register for ‘LEASE Learn’.
In the News
£2.9 million extra funding to protect homes from flooding
As heavy rain is once again forecast for many parts of the country during August, DEFRA and the Environment Agency have announced extra funding to support three projects to increase flood resilience in residential property.
Three projects across Yorkshire, Devon and Cornwall and central England have been chosen to receive up to £700,000 each to boost research into, and uptake of, property-level measures which can better protect homes and businesses from flooding.
The funding will go towards new research initiatives, demonstration centres and advice portals which will help people to learn about the benefits of installing measures in their homes which can significantly reduce the potential impacts of flooding. The remaining money will be used to fund further research, support project delivery and evaluation as well as initiatives to share the findings and lessons learned from the three projects across the rest of the country.
Property-level flood resilience can include a range of measures to reduce the damage that flooding can cause to buildings. This can include installing flood doors, hard floors and ensuring that electrics are raised off ground level around the home. The measures can significantly reduce the amount of time people are out of their home following a flood.
Esther McVey is named seventeenth Housing Minister in less than 20 years
Esther McVey has been appointed Housing Minister with Robert Jenrick named the new Secretary of State for Housing, Communities and Local Government as part of new Prime Minister Boris Johnson’s cabinet reshuffle in July.
McVey has served as Member of Parliament (MP) for Tatton since 2017. She previously served in the Cabinet as Secretary of State for Work and Pensions in 2018 and Minister of State for Employment from 2014 to 2015. She replaced Kit Malthouse as Housing Minister, who spent just 12 months in the role and Jenrick replaces James Brokenshire, who left the position after just over 12 months.
Jenrick previously worked in the Treasury as Exchequer Secretary, and prior to that he was the Parliamentary Private Secretary of Michael Gove, during his time as Justice Secretary, and Amber Rudd, during her time as Home Secretary.
ACM cladding fund – how to claim
In July, the Ministry of Housing, Communities and Local Government published the prospectus for the Private Sector ACM Cladding Remediation Fund.
The prospectus sets out the scope and eligibility criteria for the fund, against which applications will be assessed. It describes which costs are covered (and not covered), the eligibility criteria, how the fund works – including important rules on State Aid – how to apply and the timetable for submitting applications.
New Housing Minister Esther McVey has now confirmed that all funded remediation work must be completed by June 2020.
Richard Blakeway is new Housing Ombudsman
On 2 September, Richard Blakeway became the new Housing Ombudsman, taking over from Andrea Keenoy who had been Interim Housing Ombudsman since August 2018.
Richard has extensive experience in the housing sector. He was Deputy Mayor for Housing, Land and Property at the Greater London Authority for eight years and chair of the Homes for London board, and adviser in the No10 policy unit. Previously he was chair of a local authority development company and a non-executive director of Homes England for nearly three years.
Leasehold/block management
Developer under pressure to scrap leasehold homes
Following an out-of-court settlement made in August, house builder Persimmon is now under pressure to scrap all its leasehold contracts with home buyers (Source: Property Industry Eye) Buyers at St Edeyrn’s Village in Cardiff, claimed they were not told by the developer at the time of purchase that their homes were leasehold.
Legal action brought by Trading Standards and alleging mis-selling, was due to start in September, however Persimmon has now offered to give all leaseholders on the estate the freehold title, and to reimburse ground rent payments “We could have communicated better,” the developer said.
Leasehold campaigners are now lobbying for thousands of other Persimmon buyers to receive the same offer – which would cost the developer a sum estimated to be millions of pounds.
Leasehold reform now ‘inevitable’ claims ALEP director
The Association of Leasehold Enfranchisement Practitioners (ALEP), said in July that leasehold reform is higher on the political agenda than it has been in a generation and that reform of the tenure is now “inevitable”.
The Government has already published its proposals to reform the sector, and a recent Labour Party report sets out the opposition’s plans for a "new deal for leaseholders".
Labour’s report, Ending the Scandal – Labour's new deal for leaseholders, proposes wide-ranging reforms, which aim to give new rights to leasehold homeowners. A consultation on the proposals which seeks the views of leaseholders and other stakeholders will close on 30 September 2019.
Mark Chick, ALEP Director, explains: “Leasehold reform is higher on the political agenda than it has been for decades; it has become a truly cross-party issue, with both Labour and the Conservatives showing a high level of political interest in the sector.
“ALEP has been actively involved in all the consultations on leasehold reform to date and we have encouraged our members to provide their expert opinions on the legal and practical aspects of any proposed legislation.
“There is a growing consensus among our members that some degree of reform to leasehold is now inevitable as it appears that the current government, or any subsequent government, will be very likely to pursue a leasehold reform agenda.
“Both the government and official opposition have already pledged to ban the sale of new leasehold houses and further proposals are to be expected when the Law Commission reports the findings from its own review, which covers topics including leasehold reform, reinvigorating commonhold and the Right to Manage.”
Property management sector “ripe for disruption” says AI investor
A leading AI investor described the property management sector as “ripe for disruption” as London-based PropTech firm askporter, which is backed by Google, secured an additional £1.5m in funding. The cash will be used to further develop its software which enables automation of repetitive and simple property management tasks. The firm is also planning to launch a digital assistant, called porter, which can carry out routine tasks automatically, such as arranging viewings and chasing arrears.
Commenting on the funding, Justin Meissel, Chief Investment Officer of askporter funder Henley Investments, commented that: “The property management sector is inefficient and ripe for disruption. Even the best managers are saddled with repetitive tasks that can be driven by an AI solution.
Askporter’s CEO, Tom Shrive said: “Looking to the future, well-run properties will largely be managed by an AI assistant that has all the context of an actual manager and complete data transparency, freeing up property agents to focus on delivering value-added, human-touch experience to occupants.
“askporter’s technology already reduces the time spent managing a maintenance task from an average of 45 minutes to only three minutes. Over the next six to 12 months, we will emulate these savings across the entire property management spectrum.’”
We will be taking a closer look at askporter in a future issue.
Government urged to fully fund HPL cladding removal by leaseholders
The cladding row rolls on, with leaseholders now calling on the government to fully fund the removal of high-pressure laminate (HPL) cladding from hundreds of buildings across the country.
In July, according to a report in Inside Housing official tests on HPL cladding declared the material safe for high-rise buildings. The government doesn’t believe it now needs to be removed if combined with non-combustible insulation.
However, when used with combustible insulation, HPL must be removed. The Ministry of Housing, Communities and Local Government (MHCLG) has said this combination of cladding and insulation is unsafe and that it is down to building owners to remove it.
As a result, cladding campaign groups representing leaseholders including the UK Cladding Action Group (UKCAG), based in London, and the Manchester Cladiators have renewed calls for government to foot the bill to remove the cladding and any combustible insulation.A spokesperson for UKCAG said it was “regrettable that the decision took so long” and called for an expanded building safety fund to remove all types of dangerous cladding and to address other issues, such as fire breaks.
Speaking in parliament in July Sarah Jones, Labour’s shadow housing minister, claimed the problem could affect up to 1,700 blocks around the country.
PRS and B2R
Is focus on home ownership unfair to tenants?
Private tenants are being disadvantaged because of the government’s focus on boosting homeownership, says a recent report in Letting Agent Today.
According to the latest Housing Market Survey from the RICS, a fall in the supply of private rented housing while demand from prospective tenants increases is “likely to squeeze rents higher.” The RICS says tenant demand has picked up despite the government’s efforts to boost homeownership, noting that a drop in the supply of private rented housing at a time when demand from prospective tenants is rising is likely to push rents higher.
Backing up the RICS findings are the latest figures from UK Finance, which show that take-up of buy-to-let mortgages slowed in June. There were 5,300 new buy-to-let home purchase mortgages completed, 3.6% down on the same period last year, while buy-to-let remortgaging dropped by 0.8%.
The Residential Landlords Association (RLA) adds that recent tax changes - including restricting mortgage interest relief to the basic rate of income tax and introducing a three per cent stamp duty levy on the purchase of new homes to let out - have led some landlords to leave the market.
In addition, the Chartered Institute of Housing notes that “tax reliefs deliver a much bigger benefit to home-owners than they do to private landlords.” David Smith, RLA policy director, believes the government’s approach is wrong saying: “These figures demonstrate yet again that hitting the private rented sector to boost homeownership serves only to hurt tenants.
Landlord bodies to join forces
The two largest landlord organisations in England and Wales have announced they are to merge. The National Landlords Association (NLA) and the Residential Landlords Association (RLA) will be renamed the National Residential Landlords Association (NRLA) and will have a membership of more than 80,000 landlords. The aim is to create a single organisation, giving a stronger voice to landlords in the PRS.
The new association is expected to launch officially on 1st January 2020, subject to initial approval at a general meeting of members later this month.
Scotland and Wales
Strengthening fire safety and building standards in Scotland
Fire safety is to be strengthened in Scotland for new high rise buildings. Facilities for people with disabilities are also to be improved in larger new buildings.
Changes to Scottish building standards published in July include more stringent fire safety provisions for external wall cladding systems. The revised Building Standards Technical Handbooks will apply in Scotland from 1 October 2019. Additional escape stairs and storey identification signs will help fire and rescue services in the event of a partial or full-scale evacuation. The new guidance will improve safety in new high-rise buildings, lowering the minimum building height at which non-combustible wall cladding is to be provided from 18 metres to 11 metres.
Also, following a separate Changing Places Toilets consultation the range and accessibility of sanitary facilities for people with more complex care needs in larger, new buildings is to be increased.
Welsh housing association launches private sector leasing campaign
A Welsh housing association has launched a campaign to encourage more private landlords to lease their properties (source: Inside Housing). Cardiff-based Cadwyn already manages more than 400 homes that are leased from the private sector, but needs more to keep up with demand.
Cardiff Council has around 8,000 households on its housing waiting list, with roughly 400 new applications each month. So the housing association has launched its #The400 campaign to encourage landlords to lease their homes and help local families find a secure home.
Welsh government proposes extending no-fault notice period
A consultation that closed on 5 September has set out proposals to extend the minimum notice period for private renters in Wales who are faced with so-called ‘no-fault’ evictions in from two months to six. The necessary changes could be made to the Renting Homes (Wales) Act 2016 before it comes into force. The legislation has been heavily delayed, with the Welsh government blaming the reform of court IT systems in England and Wales. It is now expected before the end of the current Welsh Assembly term in 2021.
Other proposals included banning landlords from serving no-fault eviction notices within the first six months of a contract and restricting their ability to regain possession of their properties if they have attempted a retaliatory eviction or are in breach of other housing laws.
Tenant fees ban now in force in Wales
It is now illegal for tenants in Wales to be charged upfront fees associated with setting up or renewing a private tenancy agreement by landlords or letting agents as the fees ban comes into force. The Welsh government estimates the new law will save tenants around £200 per tenancy.
Landlords and letting agents are now only allowed to require a payment for rent, security deposits, holding deposits, a payment in default (when a tenant breaches a contract), and payments related to council tax, utilities, a television licence or communication services. A ban on lettings fees in England came into force in June.
Fire safety
Fit sprinklers in all buildings that house ‘vulnerable people’, urges MP
Laura Smith, the Labour MP for Crewe and Nantwich has called for sprinklers to be fitted in all buildings across the country that house vulnerable people, after a huge fire devastated a care home in Crewe earlier in August.
Smith said sprinklers are the “bare minimum” that should be expected in buildings where old people, children and anyone else who is vulnerable are living.
Firefighters told her following the blaze that sprinklers would have helped contain the fire, which is understood to have started in the roof and spread quickly through the timber-framed block.
She has now called on Cheshire East Council to perform an audit to identify all buildings in the area which are made of timber, lack sprinklers and are home to older people.
When asked by Inside Housing whether she thought this audit should be performed nationally, Ms Smith said she did, adding that she has written to the prime minister asking the government to review its building and fire safety regulations.
“Private companies will work within the rules set by government. If those rules aren’t putting safety first then there are some serious questions that need answering,” she said. In a statement yesterday, Cheshire Fire and Rescue Service said that the fire “did not behave as expected” and “spread rapidly” across the building.
The National Fire Chiefs Council (NFCC) has been calling for a change in fire sprinkler laws for some time. In March the NFCC said that current legislation needs to change and that England is lagging behind Scotland and Wales in terms of fire sprinkler inclusion. Both Scotland and Wales have introduced changes in legislation, including a reduction in the height restrictions for fitting fire sprinklers.
There are also instances in Scotland and Wales where fire sprinklers have become a mandatory requirement. This includes fire sprinklers for flats, as well as a mandatory installation of fire sprinklers in care homes. As well as schools and other buildings, the NFCC have also called for sprinklers to be made part of fire safety solutions for new and existing buildings.
Andrew Bulmer, IRPM’s CEO comments: “Calling for sprinklers to be installed for buildings housing vulnerable people raises a secondary issue, in that most residential buildings have some vulnerable people in them, be they children, the elderly, dementia sufferers or folk with other conditions. What of those people?”
London tenants call for end to ‘stay put’
The London Tenants Federation (LTF) has urged the government to put an end to the ‘stay put’ policy which is standard practice when there is a fire in a high-rise block. The tenants group called for the change in its response to the government’s consultation on a proposed new building safety regulator following the Grenfell Tower fire (source: Inside Housing). The LTF said ’stay put’ should be replaced by a “suitable evacuation strategy” in every individual block of flats, also taking into account ways to support residents who cannot self-evacuate".
The group is also calling for mandatory annual fire drills in residential blocks, a ban on all forms of combustible cladding on buildings taller than 11m, and for sprinklers and communal fire alarms to be fitted in all new and existing blocks.
Andrew Bulmer, IRPM’s CEO comments: “IRPM have raised the issue of the stay put policy with the Hackitt team at MHCLG. We are concerned that in the event of a fire, human nature may override any instructions to stay put. It is all very well having a stay put policy but we are of the view that a fire strategy must take account of the possibility that the residents decide to evacuate, especially if the fire gets out of control (see also my lead article on failed Type 4 Fire Risk Assessments). I am well aware that people die escaping from fires when they would have been safer staying put. But If I were in a tall building on fire, I’d try to get out if I could, whatever the policy. That’s human nature and fire strategies must account for that.”
Legislation
Court reform “a matter of urgency” say landlords
It now takes private landlords an average of 22.5 weeks from making a claim to the courts for a property to be repossessed says the Residential Landlords Association. This is up from 21.6 weeks since the beginning of the year.
The figures, released in August by the RLA, suggest that a major problem contributing to the backlog is the fact that the courts are unable to cope when landlords look to repossess properties for legitimate reasons (source: Landlord Today).
Recent research found that 79% of private landlords with experience of using the courts to repossess properties are dissatisfied with the way they work. The RLA poll revealed that 91% of landlords would support the establishment of a dedicated housing court.
So it is now a “matter of urgency” that the government brings forward its plans for court according to John Stewart, the RLA’s policy manager. “This requires a fully funded, properly staffed, dedicated housing court that can bring rapid justice for landlords and tenants. Tinkering with the existing system will not be good enough,” he says.
However, property agent Haart has a different take on the issue. While supporting the need to improve the Section 8 process, the agency says scraping Section 21 evictions will give tenants “an additional level of security, which could attract more ‘lifestyle renters’ to consider the long-term benefits of renting a house they can truly call home.”
A new deal for renting: consultation ends in October
In April 2019, the Government announced that it will end ‘no-fault’ evictions for renters with assured shorthold tenancies. This will be done by repealing section 21 of the Housing Act 1988.
The Government published a consultation on 21 July on implementing this decision to modify the eviction process, with views sought, in particular, on whether there are any circumstances in which a landlord should be able to recover possession if a tenant is not at fault and, if so, whether any new Grounds need to be added to Sch.2, Housing Act 1988.
The paper also asks for views on whether the reforms should apply equally to the private and social sectors.
The proposals relate to England only and the consultation period closes on 12 October 2019. The paper can be found here.
Legal update
Take care when submitting service charge demands
Mark Loveday takes a look at a case that highlights the need to serve demands for payment correctly
In the recent case of Westlake Estates v Yinusa [2019] UKUT 0225 (LC), W was the freehold owner of a block of flats. Y held a 125-year lease of one of the flats and was required to pay service charges. The demands for payment of service charges produced to the First-tier Tribunal comprised three pages. These included:
• a covering letter setting out W’s name and address;
• a sheet headed “Service Charges – summary of tenants’ rights and obligations”, and;
• the service charge invoice itself on a sheet headed with W’s name and address.
The tribunal determined there was no liability to pay service charges over a six-year period on various grounds. These included a finding that the demands for payment did not comply with s.47 of the Landlord and Tenant Act 1987 and did not include the information prescribed by section 21B of the Landlord and Tenant Act 1985. W appealed to the Upper Tribunal.
The first issue related to s.47 of the 1987 Act, which requires that a written demand for payment of service charges “must contain the following information, namely … the name and address of the landlord…”.
If the landlord fails to comply, the tenant need not pay any charges until a demand is made in the proper format. In this case, W did give its name and address on its letterhead and demand, but Y argued that in every case the name and address must be identified as that of the landlord.
However, on appeal, Judge Elizabeth Cooke did not agree. She found “no indication that where there is only one name and address given the tenant is to be told that they are the name and address of the landlord”. In her view the information in the demand was clear, and was clear whether or not the tenant happens to be familiar with section 47 of the 1987 Act.
The second issue depended on evidence. There was no evidence in the summary of rights and obligations that section 21B had not been complied with.
Lessons for property managers and their clients
First, the rather technical objection to the demands under the 1987 Act was rejected. It is sufficient to give the landlord’s name and address on demands, even if the landlord is not identified as such. It is nevertheless prudent to refer specifically to s.47 of the 1987 Act. Second, once a landlord produces a copy of a demand, it is up to the tenant to show it did not receive a part of that demand. It is not necessary for managers to be able to prove receipt of every single page of every single service charge demand they issue.
Other need-to-know cases
Buttermere Court Freehold v Goldstrom and Parissis [2019] UKUT 225 (LC), Judge Elizabeth Cooke. The Upper Tribunal determined that leases of flats include the meter cupboards located in the hallway outside each flat. Responsibility for their maintenance, repair and decoration therefore lies with the individual tenants and not the landlord.
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 points
What can managing agents do to prepare for a ‘no-deal’ Brexit?
The chances of the UK leaving the EU at the end of October without a deal seem increasingly high, so if you employ anyone from the EU, the European Economic area or Switzerland, what are the implications for them and for your business?
Government has opened a web site to give guidance on how to prepare for Brexit and it does give advice for employers.
The CIPD has also produced a helpful guide giving employers some advice and plenty of links to useful sources of online help and information.
Plenty of managing agents employ people from other EU countries. They may like to support their staff to apply for the EU Settlement Scheme, which makes it easier for EU/EEA/Swiss nationals who want to stay in the UK to get the immigration status they need. You can signpost the necessary guidance to them using the Home Office employer toolkit and the government is urging employers to help keep up the momentum of applications as we approach Brexit.
The majority of people who have been living here continuously for five years should be able to get ‘settled status’. Anyone with less than five years should be able to get ‘pre-settled status’ and then this can be upgraded to full settled status once the five year period has passed. Irish citizens are exempt from the scheme due to the Common Travel Area Agreement. To-date more than a million EU nationals have been granted settlement rights. In a no-deal situation, the deadline for applications will be 31 December 2020.
The CIPD also outlines the new rules around EU/EEA/Swiss citizens arriving in the UK after Brexit, explaining what they need to do in order to live and work here. It also looks at the government’s proposed plans for a new immigration system from 2021.
More funding for on-street EV charging but no help for flat owners
The Government has doubled funding for on-street electric vehicle (EV) charging, pledging an additional £2.5 million to fund the installation of over 1,000 new on-street residential charging points. The scheme, announced by Transport Secretary Grant Shapps on 12 August aims to encourage even more people to choose an electric vehicle by making it easier to charge their cars near home, following a 158% increase in battery electric vehicle sales compared to July last year. This is good news for householders but what about people living in residential blocks?
In July, the government announced a consultation setting out proposed changes to the Building Regulations in order to provide every new residential building with a parking space with an EV chargepoint. This would also apply to buildings undergoing a material change of use to create a dwelling.
However, there is a big gap in the consultation paper: it makes no mention of existing residential property and in particular blocks of flats, which can’t benefit from on-street charging unless residents park their cars remotely from their homes. Not a particularly practical solution.
There are proposals requiring every residential building undergoing major renovation with more than 10 car parking spaces to have cable routes for electric vehicle chargepoints in every car parking space. However, no solutions are offered to the many questions raised by leasehold property, such as restrictions on development or modifications within building leases, who pays, and how should costs be allocated among residents when only a percentage want to buy into EV.
Jamie Willsdon, director of EV charging solutions provider Future Fuel raised these issues with the DoT earlier this month and is hoping to garner support from the residential block sector to put pressure on government to tackle the issues raised by leasehold property.
“I was hoping the latest publication from the Department of Transport may have some positive content that covered existing multi-dwelling residential blocks that I could share with our industry. Sadly I find it doesn’t. This is a huge sector and something installers/designers working in the residential block market will need assistance with. I’ll be working hard to engage leading players in the block sector to lobby government on this issue on behalf of flat owners,” He said.
The consultation closes on 7 October.
Topic of the month
Who owns your roof?
An Upper Tribunal decision has handed tenants an important victory concerning ‘common parts’ including roof spaces and airspace leases in leasehold enfranchisement. Mark Chick explains the implications.
In urban areas, space is always at a premium and property owners are always looking for room to expand. Often, as the old song goes, the only way is up. In a block of flats the freeholder may want to create or reserve value for the future, and one way of doing this is with the grant of a lease of the airspace above the property.
In the case of LM Homes (and others) v Queen Court Freehold Company Limited [2018] heard in the Upper Tribunal (Lands Chamber), it was determined that a lease of the airspace above, and the subsoil below a leasehold block of flats must be classed as "common parts" of the building when deciding if they were to be acquired as part of a lease. This decision that could have a profound impact on the property sector.
Why is the decision so important?
In the case of Queen Court the freeholder had sold off leases of the airspace above the property and also separate leases of the subsoil, and a part of the boiler room. Investors had paid fairly significant sums for these in the hope of future development. The fact that it has been judged that the leases can be acquired as part of an enfranchisement will make it more difficult to implement similar schemes successfully in the future. So bad news for landlords but good news for tenants.
How do you create an airspace lease?
When looking at airspace, two points have to be borne in mind. First is the creation of the lease itself. This will normally trigger the provisions of the Landlord and Tenant Act 1987 and means that it has to be offered first to the flat owners under the “right of first refusal”. Only if they do not accept this offer to sell to them can the transaction proceed.
Second, if a lease of the airspace (or any other area) outside the flats has been created, and a claim to the freehold is made by the flat owners under the Leasehold Reform Housing and Urban Development Act 1993, then the question will arise as to whether (as a matter of law), the flat owners are able to buy the leases of these spaces. This point was central to the case of Queen Court.
The test that determines whether the lease of an area outside the flats can be purchased depends on Section 2(3) (b) of the 1993 Act. This says that a lease of common parts can be acquired if the purchase of that area is reasonably necessary for “the proper management or maintenance of those common parts.”
It was this test, its meaning and how you might be able to ‘work around it’ to retain a leasehold area, that is the most important part of the Queen Court decision.
Is the airspace above a block of flats a common part?
It has been settled law for some time that the airspace above the property is a ‘common part’ and there are a variety of cases under the 1987 Act confirming this (notably Dartmouth Court Blackheath Limited v Berisworth Limited [2008] EWHC 350 (Ch)). Any sale of the airspace above a block will therefore have to be notified to the tenants under the ‘right of first refusal’ under the Landlord and Tenant Act 1987, unless it falls under one of the exceptions to this rule.
Under the 1993 Act, (where the tenants are looking to buy the freehold and other areas on a compulsory basis), there are also cases that confirm that the airspace can be a common part when discussing whether a lease of it can be acquired.
In Queen Court, the Upper Tribunal looked at a number of points of detail about the distinction between areas that the flat owners do not have access to, but that could still potentially be ‘common parts.’ This was contrasted with the scenario where the area in question had ceased to be within the flat owners’ use and had then been made subject to a lease. In that sort of case, (provided that the area was not needed for proper management or maintenance), it would not be acquired.
So, while it can’t be said categorically that all leases of areas outside the flats themselves will be able to be acquired, if the lease is found to be a lease of what are deemed to be ‘common parts’ then the simple act of the landlord creating a lease of this area will not be enough to stop it being deemed as such.
As the tribunal said: “If it were the case that a lease of the common parts, by itself, was sufficient to cause an area which continued to provide some shared benefit to the building no longer to be a common part, the provisions of the 1993 Act entitling tenants to acquire the common parts would be largely redundant.”
In Queen Court, the creation of the airspace lease itself was valid, but the key question was whether the lease which allowed access over the existing airspace, would offend these provisions if it was not acquired and simply left in place. This would leave the owner of the airspace lease free to carry out further development.
The airspace lease in Queen Court reserved rights in favour of the landlord (which would of course be the flat owners if the freehold changed hands) - allowing ‘for the proper management or maintenance of’ the common parts comprised in the airspace.
This is the exact test for acquisition under the enfranchisement legislation and so the central question was whether a lease of a common part reserving rights in this way would provide enough ‘access for proper maintenance and management’ and in doing so would mean that because these rights were provided that the lease did not need to be acquired.
The position on this has been unclear until now.
The decision
At first instance, the lower tribunal (the First-tier Tribunal) had held that the tenants could acquire the airspace lease (and the other leases) and so the landlords appealed to the Upper Tribunal.
The Upper Tribunal decided that because the rights granted were over the current roof space and air space above it that development of these areas would destroy the particular areas in question. Martin Rodger QC held at paragraph 85 of the decision:
“….the appellant intends, if planning permission can be obtained, to undertake work which will cause the airspace no longer to be accessible. Convenient access to the structure would become impossible because of the presence of an additional flat or flats on top of it, and any change in the structure would be unnoticed and difficult to monitor. In my judgement the risk of these consequences makes it reasonably necessary for the proper management of the airspace that the airspace lease be acquired. If the lease is not acquired the airspace will be incapable of being managed as it currently is. It does not matter that the respondent will presumably still have access to a new roof over the Building, or that it will have access to the existing structure in the exercise of the rights reserved in the airspace lease, since the former will relate to a different structure and the latter will involve a very much more complex operation than is currently possible.”
What the decision seems to be saying therefore is that the management of the airspace itself would not be possible unless it were acquired.
What does this mean in practice?
The first thing to take away from Queen Court is that the decision itself is subject to an appeal. The landlords are seeking leave to appeal the Upper Tribunal’s decision, which means that the position may not be certain for a while yet.
However, if the law remains as it is then this may have big ramifications for developers and freeholders looking to realise additional value by the use of such leases.
Mark Chick is an ALEP Director and Executive Committee member and a partner of Bishop & Sewell LLP
Defects database
How much do you know about cavity walls?
Since the 1920s, most homes have been built with cavity walls. This is for two reasons. They are brilliant at combating the effects of damp, and are good for boosting thermal insulation - very important in a temperate country like Britain. The cavity acts as an impassable barrier to most forms of damp, and unless it is bridged in some way, water that soaks the outer skin, will run down the inner face of the outer skin and normally find its way back out to the external environment when it hits a weep hole, the cavity tray or DPC close to finished ground level. In a similar way the warmth from the inside of a property cannot be conducted away into the cold external facing leaf of wall when there is an air cavity in the way. Cavity walls retain heat better than solid walls because they guard against ‘cold-bridging’ much more effectively.
Since the introduction of the 1965 Building Regulations it has been a requirement for external walls to achieve a specified level of thermal performance, achieved by incorporating insulation within the cavity. Over the years revisions to these regulations have only increased these requirements, and depending on the exposure level of the wall, may incorporate partial or fully filled insulation.
Correctly identifying the form of the external wall construction is the pathway to establishing common construction details and understanding potential defects.
So do you know the difference between cavity and solid wall construction? Put simply, a cavity wall has two ‘skins’, outer and inner, with an air gap between them, whereas a ‘solid wall’ is packed full of masonry or material all the way through with no deliberate voids.
The identification of a cavity wall allows you to confirm the presence and issues associated with cavity trays, weep-holes, wall ties and cavity closers. These are all important factors when dealing with complaints of penetrating dampness, condensation and cracking - the bane of property managers and leaseholders alike.
The typical bugbears of solid wall construction are energy efficiency, cold bridging, condensation and bridged DPCs. The rectification of these requires consideration of any historic fabric, improving the ability of the building to respond to its environment (typically hampered by ill-thought out alterations) and the impact on internal areas.
So how can you tell them apart by looking? Easily, especially with masonry walls. The outer skins of cavity walls built of brick or blockwork will almost always appear stretcher bonded / half a brick thick. A stretcher bond is continuous runs of brickwork with only the sides of the brick (stretcher) showing, each course overlaps at the centre point of the bricks above and below. Solid external walls are hardly ever built of half a brick thick, stretcher bonded brickwork. It’s just not sturdy enough. So if you see stretcher bonding, it’s almost certain to be a cavity wall. Anything else is probably a solid wall.
Ed Lewis is a building surveyor with Earl Kendrick
IRPM events
Go to the Events page for more information
11 September 2019 - Associate Exam in London & Birmingham
11 September 2019 - Member Exam Workshop - London
12 September 2019 - Member Exam Workshop - London
17 September 2019 - Regional Seminar - Bristol
25 September 2019 - Member Exam in Glasgow
26 September 2019 - AGM 2019
26 September 2019 - Fellows Day 2019
2 October 2019 - Regional Seminar - Manchester
10 October 2019 - Regional Seminar - Southampton
15 October 2019 - Member Exam in London & Manchester
22 October 2019 - Regional Seminar - Birmingham
29 October 2019 - Regional Seminar - London
