Technical Update - June 2019

The month in brief

Welcome to the June issue of the Technical Update. We are late publishing this month due to the Annual Seminar, so scroll down for a full report and a round-up of key messages from your CEO Andrew Bulmer.

Two big news stories this month are a sneak preview of the thinking around regulation and qualifications in the leasehold sector from Lord Best and the publication by the MHCLG of two consultations on building safety – one focusing on reform of the regulatory regime and the other, a call for evidence, seeking views on the effectiveness or otherwise of the Regulatory Reform (Fire Safety) Order 2005. Timely in light of the fire in Barking where wooden balconies were instrumental in rapidly spreading the flames. See In the News to find out how to submit a response and/or contribute to the official response that will be put forward by the IRPM.

In other news, we report on the ongoing issue of non-ACM cladding, look at the case for a global fire safety standard and ask whether facial recognition is the way forward for door entry systems. Mark Loveday rounds up the last month’s key legal cases and this month’s Defects database looks at penetrating damp.

It was great to see so many of you at the Annual Seminar last week. Your feedback on the Technical Update was, as always, very welcome.

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 | Sold-out Seminar is biggest yet | IRPM Award winners are announced

In the news

Draft ROPA report: regulation is on its way | Building a safer future – your chance to respond | Most ‘at risk’ blocks will fail cladding tests, say fire experts | Facial recognition – security or surveillance?

Health & safety

Revised British Standard on Legionella Risk Assessment | ‘Always on’ culture is impacting employee wellbeing, says survey

Fire safety

Home Office launches call for evidence on fire safety | Are your residents fire trained? | The case for a global fire safety standard | Welsh Government to reform fire safety in high-rise buildings

PRS and B2R

Regulate short-term lets or risk losing long-term residents, says new study | Brethertons White Paper highlights the dangers of AirBnB leasehold properties | RLA: landlords more likely to exit market if no-fault evictions are banned

Social housing

Inquiry into affordable and social housing provision: have your say | Councils must meet health and safety obligations, says Regulator | Solar energy pledge for social housing from Labour

Legislation

Tenant fees banned in England – and in Wales from September

Legal update

Mark Loveday looks at this month’s key cases | Top 10 Legal Cases All Property Managers Should Know | Tribunal Procedure (Amendment) Rules 2019 now in force  

Talking points

Could you be caught by the Company Secretary Catch 22? | Are disputes between occupiers taking up too much of your time?

Topic of the month

The pre-action protocol for debt claims: is it working?

Defects database

Penetrating damp

IRPM events

What is happening, when and where?

 

IRPM News

Message received, message understood 

What were the takeaways from this year's Annual Seminar? Andrew Bulmer rounds up the key messages from this year's event

You can’t please all of the customers all of the time. Different folks have different ideas on what good looks like, and there is that tiny minority of people you will just never please. To quote Martin Boyd of LKP at the IRPM Annual Seminar last week “property management is a bloody difficult job”. Yep, he said that - and ain’t that the truth? And running a huge event is much the same.

The Seminar was sold out again with 78 on the waiting list and a practically unheard of satisfaction score of 97% "likely/very likely to recommend". "Very positive", we were told; "as friendly and member focussed as ever", some even said "inspirational".

Good to see IRPM at the top table, pushing for the public interest yet also member-focused. My favourite comment? That "IRPM is about high standards and professionalism". Government and other stakeholders were in the hall and I can tell you that message was received and understood.

Be very clear, your professionalism is now firmly recognised and seen as leading the sector to a better place.  You are being seen to be “doing the right thing”.

Interesting seminar presentation on “perception of a perception”; ie how you think your customer is thinking about you and vice versa. Which made me think… Like you, the reality is that a fantastic team of great people worked really hard with the best of intentions and did a superb job, says that 97% recommend score. And most customers were very happy.

But nothing is perfect and we learned some important lessons too. High scores for the food, but some missed out. Not enough delicious chocolate desserts, which is unforgiveable beyond all measure! Sessions too fast/too slow; more/less on law; ‘future of the industry’ talks inspirational/a yawn; breaks too long/short; don't want to hear critical speakers/industry must listen to criticism. 

Critical feedback is fantastic and has given us plenty to think about for next year. Like you, we can't always deliver on, or even agree with everything that is said, but it is good to listen and find the truths in there, so we can do even better next year, So thanks for the excellent feedback. Messages received and understood!

Andrew Bulmer, IRPM CEO

 

Sold-out seminar is biggest yet

The IRPM team welcomed more than 700 members to this year’s sold-out Annual Seminar on 13 June. the audience were treated to a packed programme at London’s QEII Conference Centre in Westminster, covering a wide range of topics from leasehold reform and legal cases to wellbeing at work and recognising domestic violence.

Former CEO Jeff Platt was host for the day, which started on a sombre note acknowledging the second Grenfell anniversary with a minute’s silence. Jeff then introduced IRPM chairman Peter DeVere Catt and current CEO Andrew Bulmer to the stage to update members on the progress being made by the IRPM on new qualifications, best practice and engagement with policy makers.

The morning session was dominated by leasehold reform and the outlook for the leasehold sector. Lakhbir Hans, Deputy Director Leasehold from the MHCLG was a last minute replacement for Heather Wheeler MP and gave an update on progress to-date on the various government consultations underway, which are looking at different aspects of leasehold. “The reforms will have a profound effect on those working in the sector,” she told the audience, going on to talk about a range of issues around mis-selling of leasehold properties, transparency of fees and tenure and redress for flat owners. The government is also looking at ways to support existing leaseholders and those who don’t use managing agents, she told the audience.

Former Housing Minister Mark Prisk MP then presented the ‘long view’ of the housing market, paying particular attention to the need to change the way we manage, let and sell homes. A lack of understanding fuels problems in the leasehold market, he said, hinting that the overall direction of travel from the government is likely to be towards a reformed version of commonhold to put control back in the hands of property owners. “Those who trade on the edge of the market, know how to get around the rules… as professionals you have the opportunity to take the lead in setting standards and calling for change,” he said.

Lord Best, chair of the Regulation of Property Agents Working Group - which includes the IRPM - continued the theme of best practice by announcing some of the findings of the draft report on mandatory regulation and qualifications (see In the News below).

Lord Best was followed by Property Ombudsman Katrine Sporle CBE, talking on the controversial topic of ‘Where agents go wrong’. Of the 200 cases resolved in 2018, problems around communication were the most common and managing agents must continue to develop a culture of customer care, she said. With reference to redress, Katrine also pointed out that those agents who offer lettings as well as management must be covered for redress for both services. Look out for an article on complaints handling in the next issue of the Technical Update.

The morning concluded with a follow-up presentation from Guddy Burnett, building on her popular session at last year’s seminar on tackling violence. Anyone who is interested in finding out more on supporting residents and staff facing domestic abuse can go to the website.

After lunch Nick Whitten, head of UK Living Research at JLL, gave a breakdown of the economic factors impacting the property market. He was followed by Roger Hardwick and Bukola Obadun-Craigs from our platinum sponsor Brethertons, giving their first legal update of the day, focusing on some of the recent case law that impacts property management.

There was more on reforming leasehold and commonhold from Law Commissioner Professor Nick Hopkins who provided an update on the RTM, enfranchisement and commonhold reviews now being undertaken. All three will report either toward the end of this year or at the beginning of 2020.

A session on inclusion and wellbeing in practice then provided the audience with food for thought as they were asked to consider their own attitudes and practices around diversity and mental health. And Martin Boyd from the Leasehold Knowledge Partnership challenged property managers to live up to the expectations of clients by improving customer service and delivering best practice every time.

Towards the end of the day, health and fire safety experts Sean Lundy and Mark Varley from the IRPMs Health and Safety Working Group looked in detail at the aims of the Building a Safer Future consultation published earlier this month (see In the news for more on this).

Nigel Howell then presented an open and honest session on the ways that property managers can tackle the problems created by a failing business and reclaim a reputation for excellence in the sector. The second part of Brethertons’ legal update, which looked at the top 10 cases all property managers should know, rounded off the day with closing remarks from Peter Devere Catt and Jeff Platt.

The seminar was supported by this year’s sponsors, enabling the IRPM to provide members with the biggest and most comprehensive leasehold learning and networking event of the year.

Platinum sponsor Brethertons, was joined across two floors of exhibition space at the QEll Centre by this year's gold sponsors who were:

• Block Accountants
• Block Recruit
• Cardinus
• CommunityFib
• Deacon
• DMG
• Dwellant
• Energy Portfolio
• Grosvenor Systems
• MySmartBox (DAD)
• PMR
• Realty Law
• Room Service by Cort
• Test Safe Alarms
• Tetra
• Yardi

Scroll down to read more from Brethertons in this month’s Legal Update, PRS & B2R and Topic of the Month sections.

IRPM Award winners are announced

This year’s IRPM Award winners were announced at the Annual Seminar on 13 June.

• Awards for outstanding performance in both the Associate and the Member Exam were won by Sarah Parkyn.
• The Brethertons Award for the most outstanding legal paper in the Member Exam went to Ebrahim Piperdy
• The most outstanding paper in the Member Exam by a candidate working in affordable housing was won by Carly Ward
• The UKAA Award for the most outstanding paper in the Build to Rent Exam went to Sam Winnard 
• Apprentice of the year was Christopher Geary.

Our congratulations go to all this year’s winners!

 

In the news

Draft ROPA report: regulation is on its way

A new Regulator and mandatory qualifications are on their way for the leasehold sector, Lord Best told property managers at last week’s IRPM Annual Seminar. This is “a brilliant endorsement of the direction IRPM has been going in for the last 17 years,” said former CEO Jeff Platt in response.

Lord Best’s working group has just produced a draft report, setting out the direction of travel being recommended to government. But this may change, he said. What is certain is that “there will be a Regulator and there will be regulation – we need to sort out the rogues and raise standards”. Any new regime will apply not only to property managers but to letting and estate agents as well as to international property agents with reference to UK sales and property guardians. Lord Best does not believe that membership organisations are well-placed to regulate themselves as there will always be conflicts of interest and the Property Ombudsman is too limited in its scope to fully-regulate the sector, as it can only deal with customer-reported issues.

Lord Best told IRPM members that in future he expects every firm will need to become a Regulated Property Agent and every individual will become a Licensed Property Agent, signing up to a sector-based code of practice that will enforce honesty, fairness and transparency in the marketplace. There is already a plethora of different codes but the new Regulator will set a high level code that property agents will be judged against. The rule books of individual membership organisations will then sit below this.

Mandatory qualification will work in a similar way, with OffQual to decide who delivers qualifications and CPD. “Grandparenting will come into play”, said Lord Best, “so that experienced agents can rest assured their existing qualifications will be recognised”. However, there may be an element of bringing qualifications up-to-date, he added.

So new regulations are coming but how long will this take? “A couple of years at least” is Lord Best’s guess, so look out for updates in future issues of Technical Update.

Click here for more details of the remit of the working group

 

Building a safer future – your chance to respond

On 6 June, the Ministry for Housing, Communities and Local Government (MHCLG) published a consultation, Building a safer future: proposals for reform of the building safety regulatory system, following up on the recommendations made by Dame Judith Hackitt’s independent Review of Building Regulations and Fire Safety. The aim is to find ways to make buildings safer for residents through meaningful legislative reform.

Views are invited on five key areas of the implementation plan set out by MHCLG in December.  

• A scope for the new building safety regime which goes further than Dame Judith recommended, covering all multi-occupied residential buildings of 18 metres or more.
• the concept of ‘dutyholders’, who have clear responsibilities throughout an in-scope building’s design, construction and occupation.
• Proposals to ensure that residents are given better information about their buildings so they can participate in decisions about safety, as well as establishing clear and quick routes of escalation for their concerns if they are not addressed.
• Plans for a new building safety regulator to provide oversight of the new building safety regime. This regulator will also oversee the wider building and regulatory system and watch over efforts to assure the competence of those working on buildings.
• Proposals to strengthen the oversight and regulation of construction products.

The proposed system will be underpinned by strengthened enforcement and sanctions to deter and - where necessary - punish effectively, non-compliance with the new regime.

Also published are:

• A ‘'quick read' version of the consultation document to ensure that the content is accessible for residents of high-rise residential buildings.
• A summary of responses to the call for evidence on engagement with residents.
• A report from the industry-led Competence Steering Group setting out their proposals for oversight of competence.

The Government has also launched a call for evidence in an effort to ensure that the Regulatory Reform (Fire Safety) Order 2005 (FSO) continues to be fit for purpose. (Scroll down to Fire Safety for more on this)

The Building a Safer Future consultation and FSO call for evidence will both be open for eight weeks until 31 July so if you want to respond by completing the online survey.

IRPM will be responding to both consultations as a professional body, so as well as submitting views from the IRPM H&S Working Group, we want to hear from you. Please send us your views on the government proposals and also on your experiences and evidence showing how the Fire Safety Order works in practice, to [email protected] FAO Andrew Bulmer. 

Most ‘at risk’ blocks will fail cladding tests, say fire experts

Most of the 1,700 ‘at risk’ English buildings with cladding not made of aluminium composite material (ACM) are likely to fail safety tests according to fire safety experts (Source: Fire and Risk Management Journal).

In February, the government widened its fire testing regime to include cladding made of non-ACM materials including zinc composite material, copper composite material, aluminium honeycomb, HPL, brick slip systems and reconstituted stone. These cladding panels are used on a range of buildings including high rise residential blocks, hotels, schools and student accommodation and research suggests that at least 160 high rises have been built with materials used in rainscreen cladding systems that were not included in previous tests.

Testing should have started in March but was delayed and fire safety experts have now expressed concerns over the criteria and methodology to be used. It has been pointed out that the proposed tests do not include insulation or cavity barriers which can contribute to the spread of fire. As a result, the umbrella group for the capital’s local authorities, London Councils, said these warnings “should serve as a wake-up call to ministers”.

Darren Rodwell, executive member for housing and planning at London Councils and leader of Barking and Dagenham Council, said: “We want clarity over the precise timetable for testing and sharing results. It’s also crucial that the government confirms its plan for dealing with materials that fail the tests.

“London boroughs believe the government should commit to funding the remediation of all dangerous cladding systems,” added Rodwell. “This is the only viable route to ensuring all buildings are made safe without further delay. It’s essential that ministers continue to work closely with councils in addressing these issues.”

Facial recognition – security or surveillance?

The use of facial recognition software in an apartment block in New York has fallen foul of residents.  The system has replaced keys and electronic fobs and the facial recognition system must now be used by tenants to let themselves in. According to Nelson Management Group the aim is to use the latest technology to improve security at Atlantic Plaza Towers – two 24-storey buildings in Brooklyn.

However, the move has triggered controversy (source: The Guardian) with 130 of the tenants in the block filing a complaint to block the introduction of the proptech system. The tenants believe there is already “a culture of surveillance” at Atlantic Plaza, with one quoted as saying “We do not want to be tagged like animals. We are not animals. We should be able to freely come in and out of our development without you tracking every movement.” The blocks already feature state of the art security cameras but the property managers insist the sole purpose of the changes would be to use the latest technology to make the buildings safer.

Image via www.vpnsrus.com 

 

Health & safety

Revised British Standard on Legionella Risk Assessment

The British Standards Institute has released British Standard BS 8580-1:2019 Water quality, risk assessments for Legionella control – Code of practice. The new document is a significant revision to the 2010 British Standard, providing further guidelines for assessing water quality and the risk of Legionnaires disease. The revision comes as government statistics confirm that an ageing population puts more people at risk of Legionellosis infection.

The standard gives recommendations and guidance on the assessment of the risk of Legionellosis presented by artificial water systems. Legionellosis is a collective term for diseases caused by the Legionella bacteria, a pathogen which normally inhabits warm, moist or aquatic environments. The most serious and potentially fatal is Legionnaires’ disease.

Property managers are legally responsible for understanding the risk to health posed by Legionella and carrying out appropriate risk assessments in the buildings they manage under the Management of Health and Safety at Work Regulations 1999 and the Control of Substances Hazardous to Health Regulations 2002. The new guidance should help them in adopting adequate prevention measures in line with their legal obligations.

‘Always on’ culture is impacting employee wellbeing, says survey

HSE statistics released for 2017/2018 show that more people in the UK are experiencing work-related stress, depression or anxiety compared to 2016/17, with these issues accounting for a higher proportion of both overall cases of ill health in the workplace and working days lost. A recent survey found that this kind of work-related stress is reported more by women than by men.

The survey questioned around 1,000 employees in the UK and found 79% of women reporting experiencing stress compared to 66% of men. Being judged for prioritising family or spending time away from work is a source of stress for some women, with 52% of senior women executives who are mothers fearing judgement the most. A number of triggers for stress were cited including workload, financial concerns and personal health concerns. For single women, personal finances were a key stress point, while working mothers reported being anxious about workload.

A key factor in rising stress levels is also the “always on” culture whereby remote working and access to emails via smartphones allows the working day to extend into evenings, weekends and holidays. In the UK, 35% of respondents reported spending too much time using their devices.

In addition, 48% of the UK respondents thought that their employers did not take workplace wellness programmes seriously enough. With reports of work-related stress on the rise and a significant number of lost working days recorded as a result, HSE advises companies to ensure they are proactive in offering wellbeing programmes to their workforces and suggests tailoring these to the differing needs of men and women. 

 

Fire safety

Home Office launches call for evidence on fire safety

The government is seeking views on the effectiveness of the Regulatory Reform (Fire Safety) Order 2005 (FSO) since it came into force in 2006. This gives an opportunity for fire safety professionals and businesses or individuals regulated by the FSO, to share their views and experience on how the Order works in practice.

The order places legal duties on anyone responsible for the safety of people using ‘regulated’ premises, which includes the common parts of residential buildings, such as corridors and stairwells. People responsible for fire safety in regulated premises include employers, business owners, landlords, occupiers and anyone else in control of the premises, such as building and facilities managers.

The Home Office is keen to hear the views of anyone who is responsible for fire safety under the FSO and property managers can submit their responses by completing the online survey. 

Are your residents fire trained?

Block managers are responsible for ensuring that residents understand what to do in case a fire breaks out in their block. In the aftermath of the Grenfell Tower fire, evacuation has become a subject of debate in high rise buildings. In low rise blocks, it remains standard practice for residents to evacuate the building immediately they hear the fire alarm sound – but do they know that? 

Fire risk specialists Lawrence Webster Forrest advise that the protocol for what action must be taken when the fire alarm sounds, should be made very clear. In a recent blog the company says that although the need for immediate evacuation may seem to be something of a ‘no-brainer’, studies have shown that people are reluctant to evacuate and are inclined to assume the fire alarm is a test or a false alarm. They are likely to wait for other indications that they should evacuate, such as other people leaving. This is potentially dangerous and LWF recommends fire training that makes it absolutely clear that the building management supports the evacuation of occupants even if the alarm proves to be false later.

They suggest the consequences of non-evacuation be illustrated by the use of visual aids to show the speed at which fire can develop. “Most people have little to no experience of fire developing inside a building and therefore base their idea of the threat level on their own experience of fire, which may be a bonfire or an outside fire. Fire inside a building represents an imminent threat to the lives of the people inside and this point must be made in the strongest possible terms,” the company emphasises.

In an emergency situation, evacuation must be completed as quickly as possible, so in order for this to be achieved, it is essential that the closest and safest means of escape is used. As a result, particular attention should be paid to:

• Developing familiarity with escape routes, which may not be part of normal access to the building or used on a daily basis.
• Familiarisation with exit devices on fire doors. These should be demonstrated and preferably, each person should be given the opportunity to operate one themselves.

Occupants must be made aware that they should not use the lifts when the fire alarm has sounded, unless they have been told to use a lift designed for the evacuation of people with disabilities or mobility issues, or to help their fellow residents.

A link to the LWF blog can be found here.

The case for a global fire safety standard

Questions are now being raised about whether it's time to establish a global set of fire safety standards for built environment professionals.

Leading the charge for standardisation is Gary Strong FRICS, who is chair of the International Fire Safety Standards (IFSS) Coalition that was launched at the UN last July (See Technical Update August 2018). The task of the coalition is to establish a common set of internationally accepted principles for fire safety aspects of design, engineering and construction, occupation and ongoing asset management.

"After reaching out to other countries, it quickly became clear that there were huge differences in the fire safety codes that existed and that… some countries didn't have any at all," says Strong, who is also Global Building Standards Director at RICS. "For example, in the UK we have green fire exit signs and in the US they are red. I've been in the States and someone has said to me 'that's red, does it mean we can't go through it?'. So, [these differences] lead to massive confusion."

These inconsistencies also make it difficult for built environment professionals working in different countries to comply with individual codes that exist, adds Strong.

The coalition is working on the first set of high-level principles which it hopes to publish later this year and the group intends to set up a document-sharing platform for built environment professionals to access and reference whenever they need. After that, the coalition will focus on the more "granular detail" around fire safety standards, covering issues such as cladding or evolving asset classes, says Strong.

To find out more click here

 

Welsh Government to reform fire safety in high-rise buildings

Welsh Housing and Local Government Minister Julie James, is to consider new legislation to replace the current Fire Safety Order and a new building control process following Dame Judith Hackitt’s independent report in the wake of the Grenfell disaster.

“While the Hackitt report recommended that all buildings above 30 metres should be subject to a new regulatory system, I believe that the situation is different in Wales, where we have fewer buildings of that height,” she said. “I am clear that the threshold will be no higher than 18 metres. We will also consider whether the new system could feasibly apply to other types of higher-risk buildings, such as those where vulnerable people sleep.

“We have a strong record of working to improve fire safety in people’s homes; we led the way in requiring sprinklers in all new and converted homes, and since responsibility for fire was devolved in 2005, the number of fires in dwellings has fallen further and faster in Wales than anywhere else in the UK.”

The minister is expected to make a further announcement on these proposals in the autumn. 

 

PRS and B2R

Regulate short-term lets or risk losing long-term residents, says new study

The rapid growth of short-term lets such as Airbnb has been a boon to tourists and landlords. But according to a new study from the Chartered Institute of Housing (CIH) it could lead to the loss of private rented homes to the short-term lets market and displacement of long-term residents from their communities if left unregulated.

The UK Housing Review 2019, published in April, suggests that Airbnb alone has over 77,000 lets in Greater London. More than half (55.4%) of these are entire homes. The bulk of the lets are heavily concentrated in Westminster (8,328), Tower Hamlets (7,513), and Hackney (5,907) boroughs.

Edinburgh has over 10,000 short-term lets, with its city centre alone having two Airbnb lets for every 13 homes, while the Isle of Skye in rural Scotland has one Airbnb letting for every 10 houses.

The analysis makes clear from the concentration of short-term lets in particular locations across the country, that the rise of Airbnb has been a highly localised phenomenon. It has created ‘globalhoods’ - ultra-desirable neighbourhoods drawing in visitors from across the globe at an ever-increasing rate.

There would be cause for concern if these properties have moved from the private rented sector to the short-term lettings sector for part of each year, and even greater cause for concern if they were now permanent short-term lets, unavailable to locals.

The CIH says potential impacts of the growth in short-term lets include:

• Non-compliance by hosts with existing regulations, such as insurance, fire safety and planning permission
• Prolonged loss of communal spaces, conveniences and facilities, since it is not just homes, but entire neighbourhoods, that are being shared, and
• Impact on local housing markets both with respect to rising rents and increased property values, especially in quite tightly bounded local areas, such as Edinburgh’s New Town.

Practical suggestions for tackling these issues include:

• Ensuring that better data exist on short-term lets, so that local authorities can keep track of their growth and location. Airbnb have pioneered this in Barcelona.
• Introducing a modest local tourism tax to assist local authorities in the monitoring and regulation of the short-term lettings sector, and
• Caps through the planning system by local authorities on the number of short-term rentals in particular high-pressure areas.

CIH chief executive Terrie Alafat CBE said: “We need to find a way to accommodate the housing needs of individual residents while allowing tourism to continue in our most popular locations. More regulation could be necessary if growth continues and local authorities still have no way to accurately monitor numbers.”  

Brethertons' White Paper highlights the dangers of AirBnB

As the story above shows, new digital platforms like AirBnB have grown so exponentially that issues around short-term lets have become a new focus for the leasehold sector.

AirBnB has become the shorthand reference for these particular types of let. To give an idea of the impact of AirBnB, the platform was launched in August 2008 and now has over 60 million users. It is used in over £57,000 cities for 2.3 million listing; there are 500,000 stays per night; and it has 640,000 hosts. It is a worldwide phenomenon and not just something which is to be considered by jurisdiction.

Here are some examples of how other countries have dealt with the issues that have arisen as a result of the growth of short-term lettings:

• Barcelona – Fined AirBnB and HomeAway €600,000 for unlicensed properties.
• New York - £7,500 fines for persons advertising vacant apartments in multiple dwelling buildings for 30 days or fewer.
• Sydney – New South Wales Government requires persons letting on a short term basis to have a licence and pay tax, also a limit on the number of days which a property can be let out.

David Richards, Senior Associate in Brethertons Defended Litigation Team has written a white paper to explore short term lettings and the dangers of AirBnB leasehold properties.

The white paper includes:

• Dangers of AirBnB leasehold properties
• Planning Controls: London
• Planning controls outside London
• Practical Examples
• Unauthorised Sub-letting?
• Caradon District Council v Paton [2001] 3HLR34
• Nemcova v Fairfield Rents Ltd [2016] UKUT 303 (LC)
• Practical considerations
• Remedies
• Other implications of subletting

The white paper, entitled Dangers of AirBnB Leasehold Properties was published on 6 June. If you would like to receive your free copy, email [email protected] with your name, company and email address. Brethertons will subscribe you to its property management email subscription list, but you may unsubscribe at any time.

RLA: landlords more likely to exit market if no-fault evictions are banned

According to a survey of 6,500 private landlords carried out in May, nearly half are more likely to stop letting as a result of the government’s plans to ban so-called no-fault evictions (source: Inside Housing) says the Residential Landlords Association (RLA).

In April, the government announced plans to abolish Section 21 of The Housing Act 1988. This so-called ‘no-fault eviction’ clause enables landlords to give tenants eight weeks’ notice to leave a property once a fixed-term contract has come to an end, without having to give a reason for doing so.

Scrapping Section 21 has been welcomed by tenants’ organisations and housing charities but landlords have warned it could reduce the supply of private rented homes and drive up rents. The RLA survey revealed that 46% of landlords are more likely to cut some or all of their investment in the PRS because of the proposals. David Smith, policy director at the RLA, told Inside Housing: “Security of tenure means nothing unless the homes to rent are there in the first place.

“With the demand for private rented housing showing no signs of slowing down, it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.

In tandem with the proposed change, the government has also set out plans to reform the Section 8 process, which allows landlords to evict tenants for rent arrears or anti-social behaviour through the courts. However, the RLA survey also showed that of those landlords who had used Section 8 to secure an eviction, 79% did not consider the courts to be reliable. There was support for another of the government’s proposals though, with 91% of landlords in favour of establishing a specialised housing court.

 

Social housing

Inquiry into affordable and social housing provision: have your say

The Housing, Communities and Local Government Committee is to investigate the effectiveness of the government’s strategy on boosting provision of social and affordable rented housing (source: Inside Housing).

The committee will look at funding for promoting new building projects and aims to identify what more can be done to “encourage local authorities and housing associations to increase provision”.

Housing charity Shelter claims that more than three million social homes will need to be built in the next 20 years to address future needs but according to the Housing, Communities and Local Government Committee, only 90,000 of the 300,000 homes the government is aiming to provide each year will be social housing, to be built by councils.

Committee chairman, Labour MP Clive Betts, said building has “stagnated” in the last decade and so the new inquiry will investigate the effectiveness of the Government’s current strategies to boost social and affordable rented housing provision. It will look at the adequacy of funding levels, as well as considering programmes and incentives for key stakeholders, such as local authorities and housing associations, to stimulate delivery.
 
The Committee will also look at the challenges facing different areas of the country and consider what lessons can be learnt from successful schemes in other countries.

Submissions to the inquiry, which has a deadline of 12 July, can be made here.

Councils must meet health and safety obligations, says Regulator

Councils in England that retain social housing stock were warned by the Regulator of Social Housing (RSH) in May that they must meet their health and safety obligations to tenants after two councils recently breached the Home Standard.

In April, Gateshead Council was sent a regulatory notice over serious fire, asbestos and electrical safety concerns in its homes and Arun District Council was taken to task over its failure to carry out effective fire and water risk assessments.  Fiona McGregor, chief executive at RSH, pointed out in the letter the part of the Home Standard which requires registered providers to meet all applicable statutory requirements that ensure the health and safety of occupants in their homes.

Solar energy pledge for social housing from Labour

Labour leader Jeremy Corbyn announced in May that the next Labour government would fit solar panels to a million social homes as part of a new Decent Homes Programme. Together with shadow business secretary Rebecca Long-Bailey, the Labour leader unveiled plans to fit 1.75 million homes in total with electricity-generating solar panels.

Labour aims to provide social tenants with free energy, saving households an estimated average of £117 a year on their bills, which could rise to £270 for retired households. Electricity that is generated but not used would be redirected to the National Grid. 

 

Legislation

Tenant fees banned in England – and in Wales from September

The Tenant Fees Act 2019, banning landlords and agents from charging fees to tenants, came into effect in England on 1 June. The new law means that landlords and agents will no longer be able to charge fees to set up or renew a tenancy in the private rented sector. The Act doesn’t just mean a ban on letting fees, but also the majority of other upfront fees payable by tenants to rent a property in England.

Refundable security deposits have also been capped with tenants now required to pay five weeks’ rent on tenancies below £50,000 and six weeks’ rent if the total annual rent is £50,000 or above. Holding deposits have been capped at one week’s rent.

Also, from 1 September 2019, agents and landlords in Wales will no longer be able to charge fees to set up, renew or continue a standard occupation contract except those explicitly permitted by the Bill. Standard occupation contracts will replace assured shorthold tenancies when the Renting Homes (Wales) Act 2016 is enacted and it will be illegal for landlords and letting agents to charge anything other than permitted payments. These are: rent, security deposits, holding deposits, utilities, communication services, council tax, green deal charges and default fees.

The Act provides for the Welsh Ministers to decide what “default fees” (e.g. replacement key, late rent payment) can be charged and what information a landlord must provide when taking a holding deposit. A consultation document has been published making provisional proposals and seeking views on them. The consultation period ends on 19 July 2019. 

 

Legal Update

Corporate costs included?

Mark Loveday looks at a recent case that tackled the question of whether or not management company costs can be included in the service charge.

Chiswick Village is a 1930s development in West London containing 280 flats.  The freehold was acquired in 1997 by CVRL, a company wholly owned by the leaseholders. The leases provided that service charges for each flat could include the landlord’s costs of:

1. “Effecting insurance against the liability of the lessor to third parties and against such other risks and in such amount as the lessor shall think fit …”, and;
2. “All legal and other costs incurred … in the running and management of the building…”

An issue in the appeal related to £7,605.65 spent by CVRL on directors’ insurance, organising and hiring premises for AGMs and obtaining legal advice about the meetings. CVRL argued the leases allowed it to add these corporate costs to the service charges for the flats. One of the residents, Mr Southey, argued they did not.

he decision in Chiswick Village Residents Ltd v Southey [2019] UKUT 0148 (LC) was that corporate costs could be recoverable through the service charges. It was an important feature that CVRL was leaseholder-owned/managed with no other assets or interests.

As to insurance, the lease covered the cost of obtaining insurance against the liabilities of CVRL’s own directors and officers. There was an obvious risk that directors might be sued and without insurance it would be hard to find people willing to take office or for the company to function at all.

As to the other corporate costs, there was “no sensible distinction” between managing the Building and managing CVRL. General administration and management of CVRL’s property could not take place if CVRL itself was not managed. The company existed for the sole purpose of administering, managing and running the building on behalf of its members.  The corporate governance activities contributed to its continuance and therefore to the achievement of that purpose, and all expenditure on those activities is directed towards that purpose. The parties to the lease were therefore unlikely to have intended any distinction between managing the company and managing Chiswick Village. 

Why is this case helpful?

Whether a service charge may properly include relevant costs depends on the wording of the individual lease. But agents frequently strip out the corporate costs of the landlord/management company from the service charges and treat them entirely separately. Indeed, paragraph 3.7 of the RICS Residential Service Charge Management Code (3^rd Ed) stresses “the need to differentiate the company administration from managing the landlord company/leaseholder relationship.”

However, this case provides support for the recovery of such costs (e.g. AGM room hire, Directors’ insurance etc) through the service charge, provided (i) the terms of the lease extend that far, and (ii) the landlord/management company is leaseholder-owned and operated. 

Other must-read cases

Point West v Bassi [2019] UKUT 0137 (LC). This high-value service charge dispute was appealed to the Upper Tribunal. The First-tier Tribunal had purported to “review” and amend its decision under ss.9 and 11 of the Tribunals, Courts and Enforcement Act 2007 and Rule 55 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. The Upper Tribunal considered the circumstances where a First-tier Tribunal had the power to do this. This is a case for those with a specialist interest in Tribunal procedure!

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 is updated on a regular basis. 

Top 10 legal cases all property managers should know

Brethertons was this year’s platinum sponsor of the IRPM Annual Seminar. As part of Brethertons contribution to the event they have created a novel and authoritative thought leadership white paper, which seeks to list the Top 10 Legal Cases All Property Managers Should Know.

The white paper is the product of a research project with leading barristers and Queens Counsel from the property management industry. It has been created in response to help residential property managers gain a better understanding of the First Tier Tribunal cases they are faced with on a daily basis.

The research project began by Roger Hardwick and Bukola Obadun-Craigs, Brethertons residential leasehold partners, identifying the top 20 cases property managers should know as part of their job. From these cases, barristers were invited to rank their top 10 in order of preference including honourable mentions of any cases they felt strongly about, which had not been included in the original list. Barristers also provided comments on why they feel the cases are important to property managers.

The leading barristers in the property management industry who contributed to the white paper, include: Justin Bates, Daniel Dovar, Elizabeth England, Jonathan Upton, Elizabeth Dwomoh, Iris Ferber, Andrew Dymond, Desmond Kilcoyne, Philip Rainey QC, Ranjit Bhose QC, Rayan Imam and Simon Allison.

Roger Hardwick, said: “It was very interesting to see that apart from the number one ranked case, even the barristers couldn’t agree which are the most important cases for property managers. This identifies how complex this area of law is, with many arguments to be had around facts and interpretation of law and the applicable cases.  What this white paper does is eradicate the noise, condensed into 10 brilliant cases with some great honourable mentions and highlighting the reasons why they are important for property managers from the perspective of the finest legal minds dealing exclusively in the property management industry.”

The top 10 cases were officially announced during Roger Hardwick’s and Bukola Obadun-Craig’s keynote talk at the IRPM Annual Seminar with the white paper was released following the event. To ensure you receive a copy of the white paper, which includes the research, showing how the top 10 cases were scored and collated, plus an overview for each case along with comments from barristers, email: [email protected]. 

Tribunal Procedure (Amendment) Rules 2019 now in force

An Order amending the Upper Tribunal (Land Chamber) Rules to reflect the expanded role of the Chief Land Registrar in dealing with disputes about local land charges (see Infrastructure Act 2015) came into force on 31 May. It also amends the First-Tier Tribunal (Property Chamber) Rules to allow the tribunal to deal with appeals by landlords or agents against fixed penalty notices served by local authorities arising out of the Tenant Fees Act 2019.

 

Talking points

Could you be caught in the Company Secretary Catch 22?

Paul Robertson calls for clearer understanding of the issues that may arise when managing agents acting as company secretaries arrange insurance for their clients.

There are many good reasons for a managing agent to become the company secretary of an RMC or RTM company. Who wouldn’t want a professional to act as their company secretary and help navigate the maze of company regulation? However, when it comes to arranging insurance, there are pitfalls that property managers should be aware of.

If a firm of managing agents acts as a company secretary then effectively that firm has become the client and – under new rules set out by the Insurance Distribution Directive - avoids the need to be regulated to distribute insurance. In theory that’s perfectly legitimate unless the managing agent accepts a commission, in which case they could be breaking the law.

The Catch 22 is this. On the one hand if they disclose that they are receiving a commission then they detach themselves from acting as client, as they are providing a professional service and can be considered to be distributing insurance for remuneration, which is a regulated activity. So if they have no insurance regulation in place they are breaking the law; something that was clarified by the insurance distribution directive which came into effect last year.

On the other hand, if the commission is not disclosed to the RMC/RTMCo client, they could be considered to be embezzling company monies. It could be argued that this is no different to an employee putting their hand in the till - which is clearly theft. Some may consider it is accepted practice for managing agents to earn commission, but then we are back to the original question: is it unregulated distribution of insurance or is it theft of monies?

Of course it is perfectly reasonable for a managing agent to be remunerated for arranging insurance, but only where the firm is transparent about the fact, providing a service and appropriately regulated. This is an area which requires more understanding to prevent property management being brought into disrepute.

Paul Robertson is MD of Midway Insurance and 1^st Sure Flats

Are disputes between occupiers taking up too much of your time?

In May, ARMA published a useful article written by Shula Rich that draws property managers’ attention to best practice when it comes to disputes between residents. Block managers are frequently called in to deal with disputes between leaseholders in blocks of flats and it can take up an enormous amount of time.

Agents usually get involved because they are under pressure from flat owners to help sort out the problem and their management company may encourage them to do so in order to deal with an endless stream of telephone calls and emails that tend to accompany a tricky dispute between neighbours.

However, as the ARMA article points out there is a widespread misconception of the role of a managing agent in handling disputes between occupiers. So to help solve the problem,the relevant section of the RICS Code has been updated and managing agents should take note of the new guidance on disputes, which is as follows.

Disputes between occupiers  

You should always refer to the lease when dealing with disputes between occupiers. You cannot go further in dealing with the parties than the landlord’s remit under the lease. 

Most leases will not allow you to recover any costs from the service charge in connection with disputes between occupiers. 

The local authority may help in establishing evidence of noise, anti-social behaviour or keeping animals in unsuitable conditions. 

You should always have regard to the enforceability clause in the lease before embarking on any action which involves expense from the service charge. 

Leases typically contain a mutual enforceability clause requiring landlords to seek an indemnity for their costs from leaseholders requesting enforcement. This may also leave the landlord the option of choosing not to enforce if it is not ‘in the interests of good estate management’.  

Any enforcement action should be with your client’s authority and confirmation that the client will be responsible for the costs until or unless recovered from the leaseholder. This can be by way of requesting estimated costs in advance as part of the indemnity. 

Complainants should be given realistic estimates of the likely time and cost involved in any enforcement. You should also consider other methods of dispute resolution such as mediation, be familiar with local mediation services and suggest this method of dispute resolution, where appropriate. Information on mediation service providers can be obtained from the National Mediation Helpline. (See Part 5.5 Alternative dispute resolution and mediation.)

 

Topic of the month

The pre-action protocol for debt claims: is it working?

Brethertons reviews the pre-action protocol for debt claims and asks how successful it has been to-date

Managing agents facing non-payment of debts will have welcomed the introduction on 1 October 2017 of a new pre-action protocol for debt claims. This applies to any business claiming payment of a debt from an individual, including an individual in business as a sole trader.

The protocol requires an enhanced letter of claim to be sent by the creditor to the debtor which must outline the basis of the claim, including details of any written or oral contract together with any charges and interest which have been added to the debt. If the claim is based on a written contract this must be made available to the debtor on request. A statement of account, information sheet, reply form and financial statement must all be enclosed.

A debtor now has a minimum of 30 days to respond to a letter of claim. However, this may be extended.

• If a debtor indicates that debt advice is being sought, the creditor must allow the debtor a reasonable period for the advice to be obtained.
• If a debtor requests a document or additional information from the creditor, this must be provided within 30 days of receipt of the request and if it is not available the creditor must explain why. A creditor must not start court proceedings less than 30 days after providing the document or information to the debtor.
• If a debtor indicates that he requires time to pay, the parties should try to agree repayment terms, based on the debtor’s income and expenditure. If a creditor does not accept a proposal put forward by a debtor, this should be communicated to the debtor in writing.

The protocol encourages the use of alternative dispute resolution, but it does recognise that the cost of mediation should be considered in relation to the amount of the debt, which is helpful. If a matter proceeds to litigation, the court will expect the parties to have complied with the protocol.

Has the protocol been successful?

The new requirements, imposed by the Protocol, were introduced with the main aim of encouraging communication between parties in an attempt to resolve disputes without the need to go to court. In our opinion, sadly this has not been achieved and creditor companies must now incur the cost of dealing with the additional disclosure requirements and wait at least 30 days after sending a letter of claim (more often than not without a response) before taking any further action.

Provisional civil justice statistics published by the Ministry of Justice (MOJ) support the argument that the protocol has not had the impact that was hoped for. The MOJ has reported a sharp increase in claims issued in the County Court for the period October to December 2018.  Indeed, during this period, County Court claims increased by 29% to 533,000 and of these, 436,000 were specified money claims. This represents a hike of 42% on the same period in 2017. The MOJ has recognised that specified money claims had been following an upward trend until October to December 2017 where volumes fell following the implementation of the protocol. However, it is also recognised that the volume of specified money claims is now returning to the levels seen prior to the implementation of the protocol.

The statistics in relation to default judgments also raises the question whether communication between the parties is a realistic goal. According to the MOJ, there were 315,500 judgments made in October to December 2018, of which 280,000 were default judgments. This means that in 89% of these cases, judgment was entered as a result of a failure to respond to the claim. This is an alarming percentage and at Brethertons, we fail to see how the protocol is going to change the behaviour of debtors in the vast majority of cases, now or in the future.

Photo by CreditRepairExpert 

 

Defects database

Penetrating damp 

Is water – not necessarily rain – entering your building from outside the habitable space? Andrew Banister takes a closer look at what could be going wrong.

External sources of water include precipitation (rain, snow, sleet, hail and even fog); external plumbing leaks such as those from soil pipes; and any water entering the building above the DPC (damp proof course) level. 

Penetrating damp generally results from poor maintenance. Typical examples are overflowing hopper heads, broken gutters or faulty downpipes. But damp penetration can also be due to poor design, such as cistern overflows dripping for a long period of time eroding the pointing and penetrating the wall. These overflows should be designed so that water is directed away from the building fabric via downpipes.

Cavity walls were designed to help prevent penetrating damp to solid walls and a well-designed, constructed and properly maintained cavity wall will do just that. 

So what should property managers – and flat owners/renters look out for? Tell tale signs of penetrating damp are internal or external staining. Check for staining down the brickwork and follow the stain upwards; it will likely lead to the source. A regular cycle of cleaning/clearing out of rain water goods such as guttering and downpipes is always recommended. While it may cost a few hundred pounds, doing this twice a year, could save money and - more important - save time and avoid severe inconvenience and expensive insurance claims. 

A surveyor will have tools such as infrared cameras and may recommend water tests to determine the source of water i.e. waste, foul or tap. Again salt tests can be used to determine the source. 

Internal plumbing leaks 

These are not so easy to self-diagnose. If your block is on a water meter, then higher bills will be an indication of escaping water. However due to the potential for causing further damage by self-diagnosis and investigation, we would recommend always seeking professional advice if you believe that there is an internal plumbing leak. Insurance policies often cover ‘trace and access’ so you can rest assured the leak will be found by the insurer’s contractor and isolated. 

Detecting water leaks

In a future article, we will take a look at the leak detection systems available to property developers/house builders and managing agents. These systems very cleverly detect, raise the alarm and even and shut off a supply to prevent large-scale escape of water damage. 

Andrew Banister MRICS is Regional Director North, at Earl Kendrick Associates  

 

IRPM events

What’s happening when and where?

Events page has all the details

14 August 2019 - Associate Exam Workshop - London

15 August 2019 - Associate Exam Workshop - London

11 September 2019 - Associate Exam in London & Birmingham

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

22 October 2019 - Regional Seminar - Birmingham

29 October 2019 - Regional Seminar - London