The month in brief
Welcome to the February issue of the Technical Update. We’re only one month into 2019 and a lot has happened already.
In January we saw the launch of a new consultation into right to manage, the promise of a new housing complaints service and mandatory sign-up for landlords to a redress scheme as well a commitment from government to establish a new homes ombudsman.
Scroll down to read your CEO Andrew Bulmer’s comments on the progress being made by Lord Best’s Regulation of Managing Agents working group - and you can sign up now for an exciting event coming your way at the end of March if you would like to fast-track to associate membership.
In other news, build to rent starts are up by almost 40% in a year, so if you are interested in gaining a qualification in this exciting and rapidly expanding sector, go to the build to rent section on the website for more details.
As always, if you have a comment or an opinion to share, why not join the [email protected] with title "IRPM Update Idea - FAO Marketing"
IRPM News
CEO’s column - Mind the gap | IRPM launches fast track associate programme | Annual Seminar 2019: get your tickets now!
In the news
Major reform not needed for leasehold, say lenders | HPL cladding could cause ‘next Grenfell-style disaster’ | Housing complaints service announced | Government commits to New Homes Ombudsman | Housing provision is up but planning holds back delivery
What’s new in HR?
Employee wellbeing: time to take it seriously
Health & safety
Two companies fined following lift death | Councils using unregistered fire risk assessors, research reveals | New rules on electrical safety for landlords
PRS and B2R
Scrap fixed-term tenancies, says thinktank | Give B2R support and drive up standards, says developer | London Mayor backs rent control | Manchester’s Angel Gardens nears completion | New B2R brand is launched | £100m Clydeside residential development gets green light | B2R starts up by nearly 40% in a year
Scotland and Wales
New homes for West Lothian | Funding increase will help deliver affordable housing | Wales needs 8,300 new homes a year, says Government | Minister calls for reform of Welsh fire safety
Legislation
Consultation launched to reform right to manage | Tenant Fees Bill expected by June
Legal update
Mark Loveday looks at this month’s key cases
Talking point
Who is responsible for the safe use of windows?
Topic of the month
Electric car charging points – coming to a block near you
IRPM events
What’s happening when and where?
IRPM News
Lord Best’s working group had overlooked landlords until the IRPM spotted the problem, says Andrew Bulmer
Lord Best’s Regulation of Property Agents Working Group has been tasked by government to come up with recommendations on qualifications, a code of practice and regulation of residential agents across sales, lettings and block management.
Lord Best will consider the recommendations and report back into government this summer. IRPM is on the working group and has spotted a gap in the brief given to Lord Best. The remit of the working group is agents only, not landlords. Raising standards in agents is close to the IRPM's heart but the gap is a troubling one for the leasehold and institutional PRS/build-to-rent sectors, where landlords could evade duties imposed on agents. If the RICS Service Charge Code was replaced by an agent-only code, for example, then bad landlords could graze the landscape unfettered.
The good news is that IRPM called this out and the civil service team at MHCLG picked it up straight away. We will see what the solution is, but they have the capacity to tackle this issue. At a time when Brexit is mopping up every spare ounce of government resource, Secretary of State James Brokenshire is growing the leasehold and housing teams across the housing sectors to drive change. IRPM is working with government on numerous levels and IRPM members will be the first to hear about those changes.
Your IRPM Annual Seminar on 13 June has been specially extended to cover it all and it will be a lively and informative event, for sure.
And there’s more…
In January there have been other developments that impact our sector. First, on 28 January, the Law Commission launched a consultation on their latest proposals (see also Topic of the Month in this issue) proposing changes aimed to make it quicker and easier for leaseholders to take control of the day-to-day management of their building.
These are big changes and, if implemented, they will have a major impact on managing agents. Put simply, in the future you are more likely to be taking your instructions from an RTM/RMC than from a third-party landlord. Great service will win business; poor service will lose it. Have your say by responding to the Law Commission consultation here. The consultation ends on10 March.
Also, James Brokenshire has announced a new Homes Ombudsman and a Housing Complaints Resolution Service for tenants and leaseholders. Yet another working group (but at least that means Government is consulting industry every step of the way), the Redress Reform Working Group will develop proposals over the coming months.
Finally, here’s a conundrum to puzzle over. Seems a small thing. Isn’t. Government wants leaseholders to have more control over their estate and with an easing of enfranchisement rules, more often to take ownership of the estate.
At face value that seems a democratic thing to do and increased democracy is a hard concept to challenge. On the other hand, Dame Judith Hackitt wants ‘someone’, a named individual, to be ultimately responsible for the safety of a building, that person being the owner. Holding someone to account seems sensible, so what’s the problem?
Well, when the freehold is owned by the leaseholders or commonholders through whatever vehicle (management company etc) that means one of the resident directors will have to stand forward as being the ‘dutyholder’ for the safety of the building. Sure, the day-to-day responsibilities of the safe management of the building may be subcontracted to an agent but the dutyholder is ultimately responsible and could end up in jail if it all goes wrong. I foresee lively residents’ meetings as the directors try to decide between them who will stand forward for that responsibility, or when the developer tries to hand over the completed site to the residents.
Again, IRPM has highlighted this both to the DJH team and the leasehold reform team at MHCLG and the civil servants are now bending their heads around that clash of reasonable ambitions. I don’t envy them. And while we look forward to better legislation in the future, it does go to show that root and branch overhaul of these things is complicated and carries significant risk of unintended consequences. Stay tuned for updates…
Andrew Bulmer is IRPM CEO
IRPM launches new Fast Track Associate Programme
To help experienced managers without a recognised qualification to gain accreditation quickly - we have developed a new fast-track Associate programme designed for ambitious, energetic and enthusiastic people who want to raise standards in the residential property management sector.
For the pilot launch, we're delighted to have partnered with PM Legal Services. They have drawn together leading speakers from across our industry, ready to deliver keynote presentations, breakout sessions and Question Time sessions at the first of our fast-track programmes to be held at the end of March. There will also be an opportunity for delegates to book a 1:1 session with our speakers in our innovative clinics.
Set in the beautiful surroundings of St Hugh's College, Oxford the fast-track Associate programme be held from 29th-31st of March and will give managers the confidence to sit the Associate exam at the end of the course. The package includes:
- Conference and training materials
- Lunch on Saturday, dining on Friday and Saturday evening
- Tea and coffee refreshments throughout the weekend
- Exam and assessment
Candidates joining our fast track Associate programme will need to demonstrate one year's relevant work experience. Successful candidates will be offered an upgrade to IRPM Associate (AIRPM).
For further details, contact the IRPM by emailing us at [email protected] with ‘IRPM fast track Associate programme’ in the subject line.
Annual Seminar 2019: get your tickets now!
The leasehold sector is going through big changes.
New laws, new codes, new qualifications, new regulation, new best practice.
If ever there was a year to come to the biggest event of its kind in the block and build-to-rent management sectors, this is it! We will be tackling the important questions for our sector including:
- The latest thinking around the Law Commission’s proposed reforms
- Updates on government plans for regulation, a code of practice and your qualifications
- “It’s the economy stupid!” Where now for UK plc?
- What does all this mean for my agency and for me?
- Plus all those essential updates and “need-to-knows”
Over lunch and afternoon tea, you will have the opportunity to meet leading industry experts and suppliers in our extended exhibition space. You can also book in advance for a free advice session with our sponsors in one of our new Consultation Bubbles. Sponsors for 2019 include:
- Brethertons
- Abbatt Property Recruitment
- Dean Wilson LLP
- 4Site
- Fixflo
- Future Group
- Seclec
In 2018, the IRPM Annual Seminar attracted more visitors than any other UK block/BTR conference and we anticipate the same take-up for 2019. Tickets are priced at £99 for members and places are limited so book yours now. We look forward to sharing the day with you.
In the news
Major reform not needed for leasehold, say lenders
Campaigners for leasehold reform reacted strongly in January to claims by lenders that the leasehold sector “works fairly well” (source: Property Industry Eye).
Matthew Jupp, head of mortgages at trade body UK Financial, told the Housing, Communities and Local Government Committee that there was little evidence of a “leasehold trap” where people are unable to sell homes because they are difficult to mortgage. “There are 4m leasehold properties in the country at least, and the market generally works okay,” he told the committee.
But Louie Burns, Managing director of Leasehold Solutions – which specialises in helping people with lease extensions and freehold purchases - said the claims were “devoid of reality”. Quoting the fact that doubling ground rents affect hundreds of thousands of people who own leasehold homes and that leaseholders are also forced into paying exorbitant fees for lease extensions, service charges, and fees for licences and permissions to carry out home improvements, Burns said “it is high time the Government fulfilled its commitment to reform the leasehold system”.
Burns claims a two-tier market is now developing in the leasehold sector, where new-build properties with zero ground rents are attractive to buyers, while existing leaseholds with onerous ground rent terms are virtually unsellable. “The Government promised real action to end feudal leasehold practices and cut out unfair and abusive practices within the leasehold system. Since then we’ve had numerous consultations but precious little action to make the system fair and just for leaseholders,” he said.
HPL cladding could cause ‘next Grenfell-style disaster’
A professor at the University of Central Lancashire has warned that the next Grenfell-style disaster is likely to be in a building clad with ‘high-pressure laminate’ materials, after publishing a study showing that it burns 115 times hotter than non-combustible options.
According to Inside Housing, Richard Hull has published the first in-depth study looking at the combustibility of popular cladding and insulation materials in the Journal of Hazardous Materials. His findings show that high-pressure laminate (HPL) cladding materials release heat 25 times faster and burn 115 times hotter than non-combustible products.
The government’s programme of building safety work has identified 441 ACM-clad buildings that it believes do not comply with regulations but there is currently no estimate for the number of HPL-clad buildings.
According to Inside Housing, no HPL cladding product has ever passed official safety test BS 8414, which would clear it for use on high rises. The magazine claims that HPL is three times as popular as ACM but is more commonly used on low rise buildings.
Insulation company Rockwool has claimed that there are another 1,678 high-rise or high-risk buildings with non-ACM combustible facades and housing minister Kit Malthouse has announced that testing of non-ACM cladding will begin in March. Some social landlords are already removing non-ACM cladding from their buildings.
Housing complaints service announced
Communities Secretary James Brokenshire has announced new reforms including a Housing Complaints Resolution Service. This will give dissatisfied homeowners and tenants a point of contact when they can’t resolve disputes over problems with their homes – such as repairs and maintenance.
Unlike other sectors, such as financial services, the housing market has several different complaints bodies, making it complex to find out how to register a complaint. By setting up a single housing complaints service for all residents – no matter whether they rent or own their home – the government aims to help people avoid battling with their landlord or builder to resolve issues on their own.The new service is also expected to make it easier to claim compensation where it’s owed. The Housing Complaints Resolution Service will be developed with a new Redress Reform Working Group made up of representatives from across the sector, working with industry and consumers.
There is currently no obligation for landlords to register with a complaints system – leaving thousands of renters without any course for redress. In future, private landlords will be legally required to become members of a redress scheme – with a fine of up to £5,000 if they fail to do so.
A Reform Working Group will be established to look at how best to provide effective complaint handling and legislation is also expected to be introduced to create new redress schemes for complaints about freeholders in relation to the management of leasehold property, park homes and student accommodation.
Government commits to New Homes Ombudsman
In a move designed to protect the interests of home-owners who buy new build homes, the Government has once again voiced its commitment to establishing a New Homes Ombudsman which will champion home buyers, protect their interests and hold developers to account.
The Government said in January that legislation will be brought forward "at the earliest possible opportunity” to require all new developers to belong to the Ombudsman, “giving homebuyers the confidence that when they get the keys to a new home they are getting the quality of build they expect”. Developers will also have to belong to the new body by 2021 if they wish to participate in the government’s Help to Buy scheme.
Housing provision is up but planning holds back delivery
The government has announced new build housing statistics for the year to September 2018. According to the latest figures from the MHCLG, 163,420 new build dwellings were completed in the year to September 2018, which is 6% higher than in the year to September 2017. There were also 166,400 new build dwellings started in the year to September 2018 – up by 1% from the year to September 2017. Private enterprise starts were up by 3% and housing association starts decreased by 8 %, compared with a year before.
Knight Frank’s annual Housebuilding Report reflects the views of more than 100 housebuilders and developers, accounting for almost three quarters of all homes built across the country each year. The 2018 report revealed that two thirds of the industry expect to increase the number of units started during the next 12 months, compared to the previous 12. However, despite the number of completed homes in England rising above 160,000 for the first time since 2007, housebuilders and developers are still facing problems. When asked which factors were holding back delivery of more homes, the top three problems were considered to be getting schemes through planning, availability of labour and access to development finance.
Commenting on the government figures in January, Paul Willmott, managing partner at property consultant Bidwells said: “Despite the still positive statistics, government needs to take a serious look at what it’s doing to boost supply: regardless of Brexit and affordability, we are not building enough homes.
“We need to keep building, even during a slowdown, and the way to do that is through encouraging more multi-tenure developments, greater diversity in housing typologies and supporting delivery through a range of providers.”
Steven Charlton, managing director of architect Perkins+Will’s London practice agreed, saying:"Government will point to the increased number of completions in today’s stats and say its policies are working. But completions are a picture of the market two years ago and housing starts tell a different story. With the looming Brexit debacle, confidence is only to decline further and thus the for-sale market will slow even more, so there needs to be more focus on alternative tenures that continue building during a downturn: social and professional rented housing.
To see the statistics in detail go to: House building: new build dwellings, England: July to September 2018
What’s new in HR?
Employee wellbeing: time to take it seriously
A survey by BUPA in 2015 found around a third (28%) of small business leaders thought their companies were too small to take employee health and wellbeing seriously (source: SHP). Apparently not much has changed. The new Not just free fruit: wellbeing at work report by the British Safety Council warns that wellbeing in many organisations is being compromised by a lack of understanding of how to implement effective programmes.
In order to remedy this situation, the report recommends giving workers the opportunity to participate in the creation and development of initiatives designed to improve their own health and wellbeing.
It also calls on bosses to make sure line managers are appropriately trained in mental health awareness and the relevant support mechanisms, so that they have the confidence to communicate with employees in a caring and sensitive manner.
The report also recommends organisations evaluate the impact of their health and wellbeing programmes on a regular basis, to ensure that they adapt and respond to the changing needs of their workers. Download the full review here.
Health & safety
Two companies fined following lift death
Two companies have been prosecuted following the death of a five-year-old girl who became trapped while using an internal lift at her home in Weymouth.
Bournemouth Crown Court heard how Alexys Brown’s family moved into the property in 2009 of which Synergy Housing Limited, as part of the Aster Group, became the owner. The property had an internal lift used by Alexys’ brother. On 13 August 2015, Alexys put her head through a hole in the vision panel and as the lift moved upward, the five-year-old’s head got stuck between the lift and the ground floor ceiling. Alexys Brown died as a result of her injuries.
To ensure the lifts were maintained and repaired, Aster Property Limited managed a contract with Orona Limited on behalf of Synergy Housing Limited.
When one of the Perspex vision panels in the lift became damaged in early 2013, this was not fixed or replaced. In May 2015 an Orona engineer visited the property to inspect the lift and noted the vision panel was damaged.
An investigation by the Health and Safety Executive (HSE) found a catalogue of failures by the three. Synergy Housing Limited of Link House, West Street, Poole pleaded guilty to breaching Section 3(1) of the Health and Safety at Work etc Act 1974 and has been fined £1m and ordered to pay costs of £40,000.
The charge against Aster Property Limited of Sarsen Court, Horton Avenue, Devizes, was ordered to be left to lie on the court file and was not separately sentenced.
Orona Limited of Europa View, Sheffield Business Park, Sheffield pleaded guilty to breaching Section 3 (1) of the Health and Safety at Work etc Act 1974 and has been fined £533,000 and ordered to pay costs of £40,000.
Councils using unregistered fire risk assessors, research reveals
New research carried out by Inside Housing revealed in January that almost 50 councils in England use unregistered companies to carry out FRAs at their properties.
The magazine says that 128 councils responded to a Freedom of Information request. Of those, 46 said they had used at least one unregistered assessor since 2010. Of these, 23 said that none of the assessors they had used since 2010 were registered. A further 56 did not know whether their assessors were registered, and only 26 said all their assessors were registered.
There is no currently no legal requirement for fire risk assessors to be registered or meet any professional standards. However, the Fire Risk Assessment Competency Council (FRACC) advises building owners to use fire risk assessors listed by third-party accreditation bodies.
New rules on electrical safety for landlords
Private landlords must use qualified electrical safety inspectors for their rented homes in future under new rules announced in January, bringing England into line with Scottish regulations. Financial penalties will be levied against anyone found not to be using “competent and qualified” people for electrical inspections. The government has also committed to introduce mandatory five yearly electrical safety checks in the private rented sector.
Guidance on the new rules, outlining minimum levels of competence and the qualifications required will be published in the near future. In the meantime, parliament is also considering a new electrical safety code for the social rented sector presented by Housing Associations last month.
PRS and B2R
Scrap fixed-term tenancies, says thinktank
Fixed-term tenancies for private renters should be scrapped and replaced by mandatory open-ended agreements in order to end so-called “no-fault” evictions, said leading thinktank the Institute for Public Policy Research (IPPR) in a new report in January (source: Inside Housing).
The IPPR also thinks the law should be changed to stop landlords evicting tenants within the first three years of a tenancy just because they want to sell their home.
The report, Sign on the dotted line? A new rental contract: Final report urges a major overhaul of the PRS. Private landlords are currently allowed to issue a ‘Section 21’ eviction notice to tenants whose assured shorthold tenancy has ended without giving a reason. This offers little housing security to the millions of private renters in the UK, says the IPPR.
In response, the thinktank is calling for “Increasing security for tenants through an open tenancy and preventing landlords from evicting to sell in the first three years of a tenancy will give much greater stability to families who rent privately, enabling them to make better homes.”
The report also calls for a review of the taxation of private landlords, changes to welfare reforms to help struggling tenants and a national landlord register.
Give B2R support and drive up standards, says developer
In response to the government’s announcement in January of shared funding for councils to crackdown on rogue landlords, Jean-Marc Vandevivere, former head of residential at British Land and now chief executive of rental developer PLATFORM_, has called on the government to give further support to the build-to-rent sector as a way of driving up standards in the rental market.
“Many renters in the traditional private rented sector often face low quality service and poor standard of accommodation and so the government is right to give extra funding to councils to tackle rogue landlords,” he said.
“Another way of driving up standards in the rental market, which is less costly for the taxpayer and less time consuming for the local authorities, is to encourage the growth of the build to rent sector, which is using institutional funding to build thousands of quality homes, that are professionally managed, offer a sense of community, and provide a range of amenities that cater to modern day working and lifestyle trends.”
PLATFORM_, which has new-build projects underway in Glasgow and Sheffield, builds homes specifically for rent.
London Mayor backs rent control
London Mayor Sadiq Khan has confirmed that he is to put together a blueprint looking at stabilising and controlling rents for the 2.4 million private renters across the city.
A recent poll shows that 68% of Londoners were in favour of capping the amount private landlords could charge.
Mr Khan has invited Karen Buck, the MP behind the Homes (Fitness for Habitation) Bill, to work with James Murray, deputy mayor for housing and residential development, to flesh out proposals for rent control laws.
The Homes (Fitness for Habitation) Bill, which gives private and social tenants the right to take their landlords to court if the property falls below legal standards, was passed by parliament last month, with Ms Buck taking it all the way from a private members bill onto the statute books.
The mayor currently has no powers to implement rent control in London by himself but has vowed to campaign and lobby for the proposals to be accepted and implemented by the government. Mr Khan said the arguments for rent control were “overwhelming” and that it was “vital the government acted to improve the quality of millions of lives”.
The percentage of Londoners now living in private rented accommodation in 2017 was 27%, up from 15% in 2000. London renters have seen the amount they spend on rent rise dramatically in the past decade too, with private rents rising by an average of 38% between 2005 and 2016.
Comment from Andrew Bulmer, CEO of IRPM
A cautionary note. Rent control can take different forms, he says, and limiting annual increases to RPI for example would be unlikely to cause most landlords a problem. However, rent capping below market rate, or even the serious threat of it, will make BTR investors think twice about building out their schemes and will cause small landlords to exit. Capped rents would reduce the supply of private rented stock and tenants will struggle to find homes.
Sadly, some lobbyists and politicians are ignoring the lessons learned from the disastrous '77 Rent Act when landlords could not gain possession and rents were held below market rate. the PRS dropped to 9% of the housing stock (less than half of what it is today) and continued to drop.
For the first five years of my career, from 1984 until 1989 when the Housing Act ’88 came in, my firm did not rent a single house. Every time one came vacant, which was usually when the tenant died, it was sold for owner occupation as the landlord finally got their value back. Low rents and secure tenancies were great for the lucky ones that had one but a nightmare for a generation of young movers trying to find a home. Back then, we had plenty of council housing, but if this happens again, where will the poor and marginal tenants live? Perhaps driven into the dark corners of the PRS where rogue landlords continue to take advantage of the lack of meaningful enforcement in the sector
Manchester’s Angel Gardens nears completion
Moda Living’s Tony Brooks topped out the 35-storey B2R development at Manchester’s Angel Gardens in January. The scheme will offer 466 homes designed exclusively for rent, ranging from studios to three-beds. As well as enjoying one of the most iconic addresses in Manchester, residents will also have access to shared amenities including: a 24-hour gym, communal lounges, co-working space and multi-use roof terrace.
The B2R project is one of the largest outside of London and was subject to one of the biggest funding deals since the financial crash, with pbb Deutsche Pfandbriefbank providing a £85m senior debt facility to bankroll construction.
A new build-to-rent developer brand, Core Living, has been launched by development and investment company Godwin Group. Godwin is targeting 500 homes in phase one of the Core Living project starting this year with a target of at least another 2,000 homes in 2020.
The first Core Living branded units will be in Leicestershire, Yorkshire and elsewhere in the north of England this year. The new company will then be targeting UK-wide locations with the aim of building another 2,000-plus homes in the following three years.
£100m Clydeside residential development gets green light
Detailed planning permission has been granted for a 498-apartment build-to-rent development on the banks of the River Clyde. The £100m scheme, providing homes that will be some of the first purpose-built for renting in Scotland, is being delivered by PLATFORM_, a developer and operator of private rented housing.
Once completed, the development will offer a mix of high-quality studio, one, two and three-bedroom apartments for rent, spread across four blocks ranging from six to 20-storeys in height. In line with PLATFORM_’s previous projects, rents will be priced to be affordable to more than 50% of local of workers.
B2R starts up by nearly 40% in a year
The number of B2R homes being built in the UK has increased by 39 % in the last 12 months according to the latest figures produced by Savills for the British Property Foundation (BPF).The new research shows that 43,374 B2R homes are now under construction compared to 31,250 at the end of 2017. In total, there are now 139,508 build-to-rent homes complete, under construction and in planning across the UK.
Savills also notes that, for the first time, the total number of completed B2R homes across the UK regions has caught up with London, with 14,615 completed homes in the regions compared to 14,801 in the capital. In terms of construction, there are 24,010 home under construction in the regions compared to 19,304 in London.
Scotland and Wales
More than 3,000 new homes are to be built in West Lothian – creating one of the UK’s biggest housing-linked infrastructure projects and generating up to £1 billion value to the economy over 15 to 20 years.
The Scottish Government’s Building Scotland Fund will provide a £26.8 million loan to assist the development as part of a support package agreed under the Edinburgh and South East Scotland City Region Deal.
West Coast Capital (WCC) the private equity partnership, owners of Winchburgh Developments Limited, has agreed a joint venture with CALA Homes to take forward the development. As well as the new homes and associated infrastructure, West Lothian Council will build a number of new state-of-the-art schools.
The Scottish Government’s overall investment in the Edinburgh and South East Scotland City Region Deal will contribute towards 41,000 new homes, 21,000 jobs and improve the skills of an estimated 14,700 people in the area.
Funding increase will help deliver affordable housing
The Scottish Government has announced that its drive to increase the supply of affordable homes will be supported by £826 million through the 2019/20 Scottish Budget. The funding will be made available through the Affordable Housing Supply Programme and is a £70 million increase on the current year.
Latest statistics show that, since 2007, more than 80,000 affordable homes have been delivered including 54,537 for social rent, 19,553 for affordable home ownership, and 6,014 for affordable rent.
Since 2014, Scotland has seen 50% more affordable housing units delivered per head of population than in England (an annual average of 137 homes per 100,000 population, compared with 86 in England).
In the same period, there have been more than five times as many social rented properties delivered in Scotland per head of population than in England (an annual average of 84 homes per 100,000 population in Scotland compared to just 13 in England).
Wales needs 8,300 new homes a year, says government
Wales needs an average of 8,300 new homes a year until 2024 according to statistics published by the Welsh Government. The figures, published at the end of January show that the country will need between 6,700 and 9,700 new homes each year for the next five years to keep pace with demand.
After that, housing need is projected to slow over the next 15 years, with around 4,000 new homes needed each year by the mid-2030s. Work began on 6,037 new homes in Wales in 2017/18 - down 12% on the previous year.
An independent review of affordable housing policy in Wales is currently underway and is due to publish its findings this April.
Minister calls for reform of Welsh fire safety
Fire safety legislation introduced in 2005 “needs to be radically reformed or replaced”, the Welsh housing minister said in January. The Equality, Local Government and Communities Committee has called for urgent new legislation to replace the Regulatory Reform (Fire Safety) Order 2005.
According to Inside Housing, the committee raised particular concerns about the order’s loose regulations on fire risk assessments and the fact that it considers flat front doors not to fall under the regulatory remit of fire services. “The order was not designed for residential buildings and therefore does not address the main risks of fire in such buildings,” said the housing minister in a letter to a cross-party committee of assembly members published this week.
Any reform passed by the Assembly will require primary legislation. This means it cannot be guaranteed during the current assembly term, which finishes in 2021.
Legislation
Consultation launched to reform right to manage
Last summer, the Law Commission was tasked by government to undertake a wide ranging review of the Right to Manage (RTM) process and to propose recommendations which would improve the existing process that is available to leaseholders. In response, the Commission has now published its consultation paper Leasehold Home Ownership: Exercising the Right to Manage, including a range of proposals designed to reimagine the (RTM) process.
Law Commissioner Stephen Lewis, commenting on the review in January, said: “The right to manage process is not working at the moment and change is needed. We’ve… focused on developing proposals that make sure the right to manage is more user-friendly, particularly for leaseholders. We look forward to hearing how the public thinks we can make the process as effective as possible.”
The consultation has a broad sweep and looks at a wide range of issues that impact RTM. Proposals outlined in the consultation paper include:
- Extending the qualifying criteria so that leasehold houses, not just flats, qualify for the RTM
- Permitting multi-block RTM on estates, and removing the 25% commercial space restriction
- Reducing the number of notices that leaseholders must serve as part of the claim process
- Introducing deadlines for procedures and exchanges of information between the landlord and RTM company, so that the process doesn’t stall
- Exploring options for a more balanced costs regime.
- Giving the tribunal exclusive jurisdiction over RTM disputes so it can resolve disputes quickly, and waive minor procedural mistakes made in the process of claiming the RTM.
The Law Commission is keen to receive comments from as many stakeholders as possible, whether they agree or disagree with their provisional proposals. These views will be carefully considered and taken into account when forming their final recommendations, which will be published in a subsequent report.
Comments should be sent using the [email protected] or by post to: RTM Team, Law Commission, 1st Floor, Tower, 52 Queen Anne’s Gate, London, SW1H 9AG.
The Law Commission’s website also includes a short survey which individual leaseholders and RTM company directors are invited to complete in order to share their experiences of the RTM process. So if you work for an RTM company you may want to pass the link on to them. The deadline for responses is 30 April.
Tenant Fees Bill expected by June
In a move to make renting more affordable and fairer to tenants, the Tenant Fees Bill is expected to gain Royal Assent and become an Act of Parliament in the near future. From 1 June 2019, agents will no longer be able to charge fees to set up or renew a tenancy in the private rented sector.
The new law will not only ban letting fees, but will also outlaw most other upfront fees paid by tenants renting a home. Refundable security deposits are being capped at five weeks’ rent and holding deposits will be similarly capped at one week’s rent.
Legal Update
Fairman and others v Cinnamon (Plantation Wharf) Ltd
Mark Loveday looks at a recent appeal that tackled the thorny subject of apportionment of service charges in a mixed-use development
The appeal in Fairman and others v Cinnamon (Plantation Wharf) Ltd and others [2018] UKUT 0421(LC] heard in the Upper Tribunal on 5 December 2018 related to two mixed use blocks which originally comprised residential units on the upper floors with commercial units on the lower floors. They all contributed to the service charges using fixed percentage apportionments. But the commercial units contributed more than 75% of the service charges while occupying only about half the floor area.
In 2015/16 the freeholder converted 17 of the commercial units into 34 new flats which were let on new leases. The new leases apportioned their service charges using floor areas, but this did not cover the extra costs which had formerly been met by the commercial units. To make up the shortfall, it then sought to reapportion the contributions of the existing residential leases.
To do this, it relied on an alleged power “if in the opinion of the Lessor it should at any time become necessary or reasonable to do so … by reason of any of the premises in the Building or the Estate being added to or ceasing to exist … or for any other reason”. The freeholder used floor areas for the new apportionments, with the effect that the service charge contributions for the existing flats greatly increased.
The freeholder was unable to reach agreement with the original leaseholders, so applied to the First-tier Tribunal (Property Chamber) under s.27A of the Landlord and Tenant Act 1985. The F-tT held that a new apportionment based on floor areas was reasonable.
On appeal, the Upper Tribunal dealt with a number of questions about the meaning of the particular provision of the leases before deciding issues of more general application relating to service charge apportionments:
Ordinarily, the F-tT does not have the power to vary a fixed service charge apportionment under ss.19 and 27A of the 1985 Act: Schilling v Canary Riverside (2005) LRX/26/2005 etc.
But this case was not concerned with the F-tT substituting an already fixed apportionment under statutory jurisdiction, but with the substitution of a fixed apportionment under an express power to do so in the existing leases.
The re-apportionment was not unlawful under s.27A(6) of the Act, which did no more than deprive a Lessor of its role in determining any new apportionment. Section 27A(6) did not strike out the whole of the reapportionment provision in the leases.
The F-tT had rightly exercised its discretion to introduce a floor area-based apportionment. In particular, it had taken into account the fact the existing residential leaseholders would pay more than before.
Apportionment based “on measured floor area … was not only consistent with the original residential units but is also a common and well-established method of residential service charge apportionment.”
“Unfair” Apportionments are frequently a bone of contention. In essence, if the lease gives a fixed percentage apportionment, the Tribunal cannot interfere under the 1985 Act. But if a landlord reapportions under an express power to do so, the Tribunal can apply its own apportionment. And an apportionment based on floor areas will generally be acceptable.
Other must-read cases
Fouladi v Darout Ltd [2018] EWHC 3501 (Ch)
This case was heard in the Chancery Division on 19 December 2018. Where the flooring of an upper flat was inadequate to prevent significant noise transmission to the flat below, the lessee and occupier of the flat above were liable in nuisance for noise caused to the occupiers of the flat below. The lessee was also in breach of covenant under the lease for failing to obtain the landlord's consent to renovation works resulting in the inadequate flooring. Although the landlord knew about the works, it had no knowledge of the nuisance and was therefore not liable by participation.
Mark Loveday is a leading Barrister with Tanfield Chambers specialising in leasehold management and enfranchisement work
To read more on case law, go to the Resource Hub which is updated on a regular basis.
Talking point
Who is responsible for the safe use of windows?
A question recently posed by one of our members to the IRPM team gave us food for thought.
A block manager reminds residents that in high winds they should ensure their windows are kept shut in order to avoid damage and to safeguard passers-by. He has in mind the tragic case last October when a pedestrian was killed by a window falling from an apartment block in London. However, one resident is a serial offender and leaves their windows open regardless of stormy weather. What can the block manager do?
We asked PM Legal Services for their view. Here's what they had to say....
It would seem sensible to start by having a conversation with the resident. A friendly email may be enough but if not, then it is worthwhile taking the time to talk face-to-face if you can. That way you can quickly ascertain whether the person in question is:
- simply thoughtless;
- is sub-letting the flat and doesn’t care (in which case pursue the issue with the leaseholder);
- is genuinely a ‘problem resident’; or
- may be suffering from some kind of mental health issue - in which case a different and more sensitive approach will be required (see below).
If a few words aren’t enough to resolve the issue, your next step is to check the lease.
Most leases have a clause regarding nuisance and will ban use of the flat in a way that would cause a nuisance, annoyance or damage to other residents. So if a leaseholder is causing a problem in this way they could find themselves in breach of contract. Persistent offenders could be politely reminded of this and, again, this should be enough to help the resident clearly understand their obligations.
Of course the ultimate sanction is forfeiture. Before a landlord can forfeit any lease, other than for non-payment of rent, a notice under s146 of the LPA 1925 must be served. Before a section 146 notice can be served, the leaseholder will need to admit the breach or a court or tribunal will need to have determined that the breach has occurred. This is a process that no one would wish to embark upon without really good cause - let alone over a left-open window. In most cases simply explaining why a breach has occurred and what the potential penalties could be, should hopefully focus the mind of the most intransigent resident.
Finally, don’t forget that someone who appears to be impossible to reason with, may not be just 'difficult'. Mental health issues, addiction problems and dementia can all present themselves as irrational behaviours, so if you suspect any of these issues may be at the root of the problem, always seek further advice or contact social services.
Comment from Andrew Bulmer, CEO of IRPM
This example illustrates nicely the challenges of balancing risks and legal responsibilities with today’s customer service culture and an archaic tenure framework. Why wouldn’t a reasonable occupier take care not to harm his/her neighbours?
Why, when a manager has to work with an occupier who is being unreasonable, does ‘the system’ ultimately require the manager to use an expensive and adversarial court process that is designed to take someone’s home from them, just to resolve a silly if important dispute?
It’s not difficult to see how relationships break down in such a situation, and why some elements of leasehold require reform to protect both parties. However, no amount of legal reform will change the fact that managers have to deal with the entirely panoply of human life, from the thoroughly delightful residents to the wilfully difficult. It always has been and will always be a people business more than a property business.
Topic of the month
Electric charging points – coming soon to a block near you
Electric cars are growing in popularity but not many blocks have charging points - yet.
The government announced in 2017 that new diesel and petrol cars and vans will be banned in the UK from 2040 in a bid to tackle the dangerous levels of air pollution that are being experienced in our towns and cities.
At present though, despite increasing interest in alternative technologies, the market for electric cars is still relatively small. In 2018 there were 155,000 of these vehicles in the UK, with around 4,500 more being registered every month. By comparison, there are around 30 million fuel-powered cars (source: Wired UK) in the country.
However, in future we will all be using electric vehicles (EVs) so this is a trend that can only gain momentum. And where there are EVs, there must be charging facilities. Charging points have already sprung up at motorway services, at railway stations, at supermarkets and in car parks but increasingly vehicle owners want the convenience of charging their car at home.
This is no problem if you live in a freehold property but leasehold flats throw up more challenges. Many developers are now installing electric charging points in new blocks as standard but for anyone with responsibility for an existing development there are a number of considerations. Here are some issues that property managers need to take into account if residents in their blocks want to install one or more charging points?
The starting point is always the lease. Residents are likely to need a license to alter from the landlord to install a charging point or points. This formal, written consent will normally cost around £650, which will need to be covered by the resident/s in question - assuming the landlord is happy to oblige.
But even if consent can be obtained, there are also issues around location of charging points and electricity supply to be considered. Some flat owners may have an allocated parking space or garage demised to them personally but any electric supply to that parking space is unlikely to be connected to their own electricity meter. Most leases provide for a right of use of parking spaces without ownership. Both scenarios probably mean tapping into the communal supply that is covered by the service charge. And when only a handful of residents are gaining the benefit from the electricity that is being used, this is unlikely to be warmly welcomed by the majority nor may it be possible under the terms of the lease.
The good news is that EV charging technology is developing fast to keep pace with demand and there are now options on the market that may get around many of the problems that residential blocks throw up.
Pay-as-you-go solutions working in tandem with a cloud-based mobile app, similar to those now being installed in public spaces and by employers, mean that electricity use can be monitored and logged. Flat owners could use such systems to pay their costs back to the block on a monthly basis, so that residents not using charging points are not subsidising those that do.
According to newly launched Future Fuel, which is now marketing a plug-in vehicle charging solution to the residential block market, very little electrical work is needed to install a simple pay-as-you-go charging system.
Installation costs may also be partly covered by a government-subsidised grant from the Office for Low Emission Vehicles (OLEV). The OLEV Grant is also known as the Electric Vehicle Homecharge Scheme (EVHS) and provides £500 off the cost of purchasing & installing a home charging point. For more information on OLEV click here.
If we all cast our minds back to the early days of satellite TV and broadband installation, take-up of those technologies by early adopters raised similar issues. Now virtually every block has broadband and the option of Sky TV as standard. So block managers should be preparing now to deal with the questions that will be asked by residents about installing EV charging points – in 10 years’ time they will be standard too.
IRPM Events
Diary dates can be found on the Events page.
26 February 2019 – Associate Exam, London & Manchester
26 March 2019 – Associate Exam in Glasgow
26 March 2019 – Member exam in Glasgow
29 March - Fast-track Associate programme, Oxford
3 April 2019 – Member Exam Workshop, London
4 April 2019 – Member Exam Workshop, London
9 May 2019 – Member Exam, 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, London & Birmingham
11 September 2019 – Member Exam Workshop, London
12 September 2019 – Member Exam workshop, London
26 September 2019 – AGM 2019
26 September 2019 – Fellows Day 2019
15 October 2019 – Member Exam, London & Manchester
