- IRPM News
IRPM's CEO, Andrew Bulmer, Exam Dates for 2018. - Media Reports
Consultation on Reform of Ombudsman Services for Housing | Ombudsman Services - Property to Withdraw from Housing | Consultation on Mandatory Five-Yearly Electrical Inspections in PRS | Call for Evidence – Help Make Commonhold More Common | Land Registry Seeks Views on Cancelling Leasehold Management Restrictions on Resales of Leases | MEES Consultation about the Removal of No Cost Exemption | L&G to Build BTR in Brighton. - HR News
Businesses will be able to Transfer Apprenticeship Levy Funds to Other Organisations | Auto-enrolment and Pensions. - Social Housing News
Affordable Home Ownership Conference | Countering fraud: a guide for housing associations. - Fire Safety News
NHBC Claims and ACM Cladding | Manchester Council Still Seeking Replies from Private Blocks | Grenfell Inquiry Update | Competency of Fire Risk Assessors | Help for Agents with Handovers of Fire Safety Information | Statistics on Blocks with ACM Cladding. - Health and Safety News
Company Fined After Falling Scaffold Clip Hits Pedestrian | New International Standard for Occupational Safety And Health | Future H&S Risks. - Legal Reports
Management Company’s Refusal of Pets Upheld in Chancery Court | Can You Use a Surplus to Ease Cash Flow Problems? - News from Scotland
Registration of Letting Agents | Revised Code of Practice for Letting Agents | New Guidance on Fire Safety Soon | Social Housing in Scotland | Housing Amendment Bill Passes Committee Stage. - News from Wales
Consultation on Regulations and Guidance Relating to Safeguarding Property in Abandoned Rented Dwellings | Vacant Land Tax Proposed | Rent Smart Wales & Licensing of PRS | Response to Proposed Ban on Fees Charged to Tenants in PRS. - Topic of the Month - Will Commonhold Take Hold
- CPD Diary of Training Events
Prime Minister Theresa May says young people have a “right to be angry” over the housing crisis that has locked so many out of the chance to own or rent a home at an affordable price. My three young adults certainly agree with that. But let’s not be partisan here. The truth is every government for decades has failed to properly house our people. A genuine omni-shambles. In any downward spiral of neglect, eventually something has to happen and when housing becomes an election matter for voters, politicians start paying attention. Post-Grenfell, with a fall in votes at the last election, they’re certainly paying attention now.
Calling on developers to “do their duty to Britain and build the homes our country needs”, May announced intended reforms to increase housing supply, specifically including Build-to-Rent (large scale, institutionally funded private rented sector) as part of the solution. Already, over 70,000 units are in the planning/construction pipeline and the sector is just getting going. Down the corridor, MHCLG (Ministry for Housing, Communities and Local Government) is driving reform of leasehold, leasehold enfranchisement and commonhold.
With more building across reformed tenures and shiny big edifices rising from the ground, the next challenge is already focussing minds. Who will manage all this new stock? And here’s the killer question. Will it be experienced, qualified, property management professionals, or upskilled hospitality workers who instinctively put the customer first? The correct answer should be… “experienced, qualified, property management professionals who instinctively put the customer first”. With Government also looking at empowering residents to switch agents, the customer really is going to be king. Way back in 1984, my first boss on my first day told me this is a people business. We all say it, but do we all live it? Enlightened firms who genuinely invest in their greatest asset, their people, to ensure strong technical skills, ongoing learning and instinctively brilliant customer service, will thrive in this mini-Gold Rush. No matter how good your processes and systems, there is no escaping this single truth – this is STILL a people business.
21 March 2018 - Member Exam Workshop - London
22 March 2018 - Member Exam Workshop - London
25 April 2018 - Member Exam in London & Birmingham
23 May 2018 - Annual Seminar - London
15 August 2018 - Associate Exam Workshop - London
16 August 2018 - Associate Exam Workshop - London
11 September 2018 - Associate Exam in London & Birmingham
03 October 2018 - Member Exam Workshop - London
04 October 2018 - Member Exam Workshop - London
30 October 2018 - Member Exam in London & Manchester
2.1 Consultation on Reform of Ombudsman Services for Housing
The consultation paper promised in December was issued on 18February. It asks for views on how to reform services but points very heavily at one ombudsman for everything. The closing date for responses is 16 April.
IRPM would like to know what you think so it can put together its response. You are encouraged to reply yourself and also to IRPM.
Download here
2.2 Ombudsman Services - Property to Withdraw from Housing
Ombudsman Services (OS) has announced that it will withdraw from complaints handling in the property sector as it launches a major dialogue with consumers to help tackle an ‘imbalance in power’ in the housing sector.
OS will work with charities, consumer groups, property professionals and the public on a major report around the creation of a single housing ombudsman for submission to MHCLG in the spring.
OS will begin a managed withdrawal from the current schemes it operates for surveyors, managing agents, estate agents and letting agents by 6 August 2018.
2.3 Consultation on Mandatory Five - Yearly Electrical Inspections in PRS
The English Government introduced new powers in the Housing and Planning Act 2016 to set and enforce tougher electrical safety standards in the private rented sector and then established a working group of independent experts from industry and a range of other sectors to develop recommendations. The working group recommended introducing five-yearly mandatory electrical installation checks for private rented property and that other safety measures be encouraged as good practice and set out in guidance. Such inspections are already required in Scotland.
On 17 February a consultation paper was issued that invites views and comments to gather additional evidence on the recommendations made by the working group including 5 yearly checks. The closing date for responses is 16 April.
Download here
2.4 Call for Evidence - Help Make Commonhold More Common
In December 2017 the Law Commission announced that it was to start a project on residential leasehold and commonhold as part of its 13th Programme of Law Reform. To take this forward, the Law Commission is asking for views on commonhold tenure, which was introduced in 2002 but has generated very little interest in the market. Since the law came into force in 2004, fewer than 20 commonhold developments have been created.
The Law Commission is launching an eight week call for evidence to find out what’s stopping commonhold taking off. Respondents are being asked for their views on three key aspects of the existing legislation:
- What are the problems in creating or converting to commonhold;
- What is making commonhold unattractive to homeowners; and
- What is making commonhold unattractive in the wider property sector?
Following this call for evidence a full consultation will address the technical legal reforms necessary for commonhold to succeed.
While the Commission will be focusing solely on legal issues, it also invites comments on what other steps should be taken to encourage the use of commonhold. These wider issues will be considered by the Government separately to the Law Commission.
The IRPM urges members to respond to what could become a major piece of legislative reform. The closing date is 18 March and the call for evidence can be found here
2.5 Land Registry Seeks Views on Cancelling Leasehold Management Restrictions on Resales of Leases
The Land Registry is seeking views on the removal of leasehold restrictions, such as the need for conveyancers to get a certificate of compliance or consent from a specific management company or landlord.
Agents like the restrictions because they mean that flat sales should not go through without notification to them, providing them with the chance to demand payment for any arrears that are owed.
Conveyancers and solicitors dislike these restrictions and accuse agents of using them simply to levy unreasonable consent fees.
The Land Registry has had a problem with the restrictions for a long time because they cause delays in registering leasehold sales, even though the sale has completed, because the conveyancer has failed to obtain a consent.
IRPM wants to know your views so it can respond as an organisation to the consultation survey. All you have to do is complete a short online survey which will take less than 10 minutes of your time.
2.6 MEES Consultation - Removal of No Cost Exemption
The consultation period for the paper that proposes to end the no-cost-to-the- landlord rule for residential properties closes on 13 March 13.
The proposal is that landlords should fund works up to a maximum of £2500 per property to reach an E energy rating, if other funding sources cannot meet that cost.
To download the consultation paper click here
2.7 L&G to Build BTR in Brighton
Subject to planning approval, L&G intends to build 200 homes and up to 3,000 square metres of commercial space on a site which is currently an industrial estate. The scheme will be the first of its kind in Brighton and would meet a third of the council’s annual housing target.
L&G already has build-to-rent developments in Walthamstow, Bristol, Edinburgh, Salford, Bath and Leeds, with a pipeline of nearly 2,000 homes. It hopes to have 6,000 units in operation, development or planning by the end of 2019.
2.8 Guidance on Challenging the Reasonableness of Administration Fees
English Government has issued a short guidance note, aimed at leaseholders, about their right to challenge administration charges. You can download it here
3.1 Businesses Will Be Able to Transfer Apprenticeship Levy Funds to Other Organisations
Employers that pay the apprenticeship levy will have the option to transfer 10 per cent of their annual apprenticeship funds to other organisations from April 2018 – giving them extra flexibility in how they use it to help close skills gaps, the government has announced. The Education and Skills Funding Agency said that employers wishing to transfer a proportion of their annual levy funds will be able to choose to whom they want to give it – providing their designated recipient wants to receive it and both parties are registered on the apprenticeship system.
Up to 10 per cent of levy funds can be transferred, calculated from the total of the employer’s declared levy value, the government’s 10 per cent top-up and a percentage applied to English organisations.
The apprenticeship levy, introduced on 6 April 2017, applies to employers with an annual pay bill of more than £3m.
3.2 Pension Auto - Enrolment Changes
From April 2018, all employees enrolled in pension schemes must pay in a minimum of 3 per cent of their annual salary, with employers contributing 2 per cent. The current minimum levels are 1 per cent for both employers and employees.
A year later, in 2019, these levels will change again, to reach 5 per cent for employees and 3 per cent for employers.
4.1 Affordable Home Ownership Conference
This year’s conference will be held on 7 June 2018 at etc.venues Fenchurch Street, 8 Fenchurch Place, London EC3M 4PB.
4.2 Countering fraud: a Guide for Housing Associations
Written by counter-fraud specialists RSM, this updated book provides practical advice on how to make your organisation protected and fraud resilient. Since the first edition of Countering Fraud in 2012, a number of developments have significantly changed the fraud landscape in the UK, specifically for housing associations. This book includes updates on:
- seven common types of fraud, with tips on how to spot them;
- new fraud types created by technological advances;
- a step-by-step guide on how to respond if fraud has been identified; and
- how to be proactive and create a fraud risk management programme.
For more information, click here
5.1 NHBC Claims and ACM Cladding
Could the NHBC warranty be liable if ACM cladding needs removal on a tower block?
New Capital Quay in Greenwich is a development where the cladding has failed fire safety tests. It has an NHBC warranty and the NHBC also provided building control approvals. Now, 30 fire marshalls are patrolling the eleven buildings 24 hours a day at an estimated cost of £25,000 a week.
An NHBC spokesperson said it had received a liability claim from New Capital Quay’s management company, PMML, but it had not yet been decided who should cover the costs. She said the NHBC can only assess the claim once it receives information from PMML, which has not yet been provided.
The freeholder and PMML dispute the lack of information and say that legal proceedings have been issued against the NHBC
One can foresee arguments here about whether the problem is structural or not and, more important, was the cladding installed in breach of building regulations at the time? This latter point still appears to be in dispute.
5.2 Manchester Council Still Seeking Replies from Private Blocks
Manchester City Council is considering sending out formal enforcement notices to owners or managers of private tower blocks that have failed to provide any fire safety information on their buildings. The council is working with Greater Manchester Fire and Rescue Service to gather information on all tower blocks across the city – both private and social – and is chasing fire safety information for 19 privately owned blocks where it has not heard back from the owners or property managers.
The council wrote to the owners and property managers of 215 privately owned buildings in November, with twelve of these buildings so far confirmed to have aluminium composite material cladding.
The inquiry has asked five experts to produce reports looking at:
- the cause and spread of the fire;
- the ignition of the cladding and insulation on the outside of the tower;
- the fire protection measures in the building; and
- the statutory and regulatory requirements in force over the lifetime of Grenfell Tower.
The next procedural hearing will take place on 21 and 22 March. The inquiry has received over 267,000 documents and anticipates this could rise to 300,000. The inquiry team has written to the core participants proposing that evidential hearings – where the inquiry will start hearing from witnesses – could begin in May and no later than 4 June.
5.4 Competency of Fire Risk Assessors
Do fire risk assessors have to be competent? Yes and no. The 2005 Regulations do not use this word. If there are two flats in a converted house with no common parts, it can be easy and much cheaper for a lessee to carry out a competent assessment.
But it is quite clear that any property manager, as the responsible person for an FRA, who does not seek to assess competency would be foolish and may be laying themselves open to liability if things go wrong. Here is a repetition of advice about assessing competency of assessors.
Tips from London Fire Brigade on Ensuring Competency
1. Ensure assessors are on a professional register and that they meet the competency criteria established by the Fire Risk Assessment Competency Council;
2. Check that they have experience of undertaking fire risk assessments for your kind of business and premises;
3. Request references from previous clients in premises of your type;
4. Ensure that the scope of the work you want carried out is agreed in writing?;
5. Ensure that you provide the assessor with access to all areas and information;
6. Obtain alternative comparable quotes;
7. Ask for proof that they have sufficient insurances; and
8. Keep records of the steps you took in selecting your fire risk.
The competency criteria referred to above can be found here
The organisations that hold lists of accredited fire risk assessors who meet the competency criteria are:
- The Fire Risk Assessment Competency Council (which wrote the competency criteria referred to above) lists four bodies which can approve individual assessors.
- The Institution of Fire Engineers has 229 individuals registered
- The Institute of Fire Safety Managers has 33
- Warrington Certification has 33
- The Institute of Fire Protection Officers has 15.
5.5 Help for Agents with Handovers of Fire Safety Information
On 23 February the English Government wrote to all local authorities to advise them of new responsibilities regarding building control of developments. Two items are of particular interest to managing agents.
First the building control officer should do more to check that, at handover, the required building information file, which is a legal requirement, is handed over to the ‘responsible person’.
Second, if there is to be partial occupation of a building still in development , developers should ensure there is a formal review and handover process, and inform building control.
You can read the full letter here
5.6 Figures on High Rise Blocks with ACM Cladding - England
The Government’s latest figures for England released on 27th February are as follows. The total number of residential buildings over 18m and public buildings in England on 10 January 2018 where it has been confirmed that Aluminium Composite Material (ACM) cladding is installed or was previously installed was 314. Of those, 301 have ACM cladding systems that the Expert Panel advise are unlikely to meet current Building Regulations guidance and therefore present fire hazards on buildings over 18m.
The government is still collating figures on private sector high rise blocks which it has asked local authorities to gather. So far,130 private residential high rise blocks have been reported and tested. Of these, 99 failed and are unlikely to meet current building regulations. Data is still being collected on remediation of private sector buildings. There are 168 social housing buildings over 18m with confirmed ACM. Of these, 158 are unlikely to meet current Building Regulations guidance for buildings over 18m in height. Of the 158 social housing buildings judged to have failed large-scale system tests, 92 have started remediation. Of these, seven buildings have finished remediation work (an increase of 4 buildings since previously reported).
6.1 Company Fined After Falling Scaffold Clip Hits Pedestrian
A scaffolding company was sentenced on 15 February for safety breaches after a scaffold clip fell approximately 20m (60 ft.) and hit a member of the public walking below. Westminster Magistrates Court heard that, on 20 March 2017, the injured person was walking along Upper Street in Islington, London when he was hit on the head by the clip. He sustained numerous cuts to his head and face, a broken nose and a severely bruised skull.
The HSE prosecuted the firm over the incident. Alandale Plant & Scaffolding Ltd of Beckenham, Kent pleaded guilty to breaching Section 3(1) of the Health and Safety at Work Act 1974. The company was fined £160,000 and ordered to pay costs of £7,059.08 and a victim surcharge of £170.
6.2 New International Standard for Occupational Safety And Health
ISO 45001, the long-awaited new international standard for occupational safety and health, is set to be published in March. The Institution of Occupational Safety and Health (IOSH) has said that the standard has gained approval and could now be published as early as 8 March.
ISO 45001 is an International Standard that specifies requirements for an occupational health and safety (OH&S) management system, with guidance for its use, to enable an organisation to proactively improve its OH&S performance in preventing injury and ill health. ISO 45001 is intended to be applicable to any organisation, regardless of its size, type and nature. All of its requirements are intended to be integrated into an organisation’s own management processes. ISO 45001 enables an organisation, through its OH&S management system, to integrate other aspects of health and safety, such as worker wellness / wellbeing.
A new report by the British Safety Council (BSC) has examined the health and safety risks of the future workplace, urging employers to assess and improve theirs and their employees’ understanding of the dangers of new technologies and the future skills required for work.
The Future risk report emphasises the need for people practitioners and businesses, trade unions, educators, regulators and governments to understand and mitigate against the changing risks of the future workplace.
The BSC called for the regulatory systems that protect modern workers to be updated to mitigate risks arising from future technology, as machines and employees are expected to work together more. These included the physical risks of working in close proximity with robots.
7.1 Management Company’s Refusal of Pets Upheld in Chancery Court
The lease said that no pets should be kept without the written consent of the management company, in this case an RMCo. The management company refused consent for a dog from the lessee, referring to a policy of no dogs agreed by lessees, except in special circumstances such as guide dogs.
The aggrieved lessee said the dog was needed for therapeutic purposes but produced no evidence to support this claim. The RMCo took the matter to the county court which granted an injunction to remove the dog; the lessee appealed and took the case to the High Court.
The appeal by the lessee was dismissed. (Who has paid for the costs one wonders?)
The case is Victory Place Management Company Ltd v Kuehn. Ref. 2018 EWHC 132 (Ch).
7.2 Can You Use a Surplus on Service Charges to Ease Cash Flow Problems?
This case report was provided by Amanda Gourlay, Barrister at Tanfield Chambers, whose Law and Lease website contains a full report on this case which included other issues. Visit lawandlease.co.uk
“This issue …is the most relevant to property managers and those handling service charge funds. It arose under a challenge under section 19(2) to the reasonableness of the on-account demands levied by the landlord.
The landlord accumulated a surplus each year and did not provide the lessees with any credits against future years.
It did so because not all lessees paid their service charges, with the result that cash flow was a serious problem. The landlord was slowly recovering unpaid service charges from the non-payers, but it had to manage with limited funds in the meantime.
It therefore increased the service charge each year, so that it could recover enough money from the lessees who paid to fund the service charges, without having to rely on the lessees who did not pay.
Mr Roberts, who himself had not paid any service charges for several years, contended that the landlord should take recovery action against the non-payers, rather than increase the service charge budget to accommodate them.
HHJ Robinson returned to the lease:
The “service charge” was defined as: ‘the Service Charge Proportion [i.e. 1/42 or a fair and reasonable proportion] of the Expenditure paid or incurred in that Service Charge Period.’
‘Expenditure” was defined as ‘the aggregate of the costs, expenses and amounts mentioned in Part 2’.
Part 2 contained a standard list of the services that a landlord normally provides to a development. That list did not include the establishment of a surplus to subsidise the non-payment by of service charges by lessees.
The lessees were obliged to make on account payments based on estimated expenditure.
At the end of the year, the landlord was required to certify the amount spent. If that amount exceeded the estimate, the lessee was obliged to pay the difference.
If, conversely, the landlord had spent less than the estimate, the lease provided that: “the overpayment will be credited to the Tenant against the next payment of Service Charge”.
It was therefore clear that any payments or credits must be based on the estimated cost of providing the services.
HHJ Robinson was mystified as to why the landlord had not borrowed money to finance the unpaid charges, given that:
The lease permitted it to recover the costs of finance through the service charge, and borrowing to cover a shortfall caused by non-payment of service charges would be covered by such a provision, following Skilleter v Charles [1992] 1 EGLR 73, CA.
Taking the above into consideration, HHJ Robinson concluded that the LVT had been mistaken in accepting as reasonable the landlord’s on account service charge demands. The reality was that, in this case, the landlord’s service charge budget had included amounts designed to cushion it against cash flow issues if some lessees did not pay.
However:
“Reasonableness has to be considered in the context of the contractual rights and obligations of the lease”.
“It cannot be reasonable for the landlord to charge on-account service charges for the purpose of providing a surplus to cover the costs of tenants who are in arrears of service charges because the lease does not authorise the recovery of a service charge for this purpose”.
That finding did not however liberate Mr Roberts from his liability to pay “a substantial sum in service charges”.
HHJ Robinson tied up her decision with some general remarks.
First, in her view, before the case went back to the LVT, the landlord should “retrospectively prepare service charge accounts” that were lease-compliant, complete with appropriate credits that would, over time, reduce to zero once all payments were up to date. That would give the LVT a “proper context” in which to assess the sums claimed. Indeed, as matters stood, so much time had now passed that the LVT could probably hear the case as a challenge to the actual costs, rather than to estimated costs.
Second, the excessive amounts demanded did not render them invalid.
“If that were the case,” observed HHJ Robinson, “any service charge demand which was found at a later date to include a sum that should not have been included would be invalid and not comply with s.20B(1).
“In fact, in the Shulem case, Morgan J envisaged that in order to comply with s.20B(1), it would be open to a landlord to err on the side of caution and include a figure which will enable it to comfortably recover all the anticipated costs.
“Therefore the service charge demands the subject of these proceedings remain demands which satisfy s.20B(1). In any event, I have also held that the Service Charge Statements of Account also satisfy s.20B(2)”.
Therefore no section 20B points arose.
The case is Roberts v Countryside Residential (South West) Limited [2017] UKUT 0386 (LC).
8.1 Regulation of Letting Agents
The Register of Letting Agents opened for applications on 31 January 2018 and the Scottish Government has set an application deadline of 30 September 2018. Registration will require evidence that everyone in a letting agency business who needs it, must have the relevant qualification covering essential aspects of letting agency work at Scottish Credit and Qualifications Framework (SCQF) level 6 or above. All of those applying to be on the register will need to meet standards as laid out in a ‘fit and proper person’ test.
To be compliant, all agencies must also hold client money in a dedicated client account, belong to a Client Money Protection scheme and hold professional indemnity insurance.
Guidance on the registration process and training requirements can be found here
To help agents understand the application process the Scottish Government's Letting Agent Registration Team have announced a series of events that will be taking place in March.
8.2 Revised Code of Practice for Letting Agents
At the end of January, government also issued a revised version of the code of practice that includes the changes made by the Private Residential Tenancy and recognises that not all letting agents hold or handle client money.
To download click here
8.3 New Guidance on Fire Safety Expected Soon
The government is updating existing guidance that is expected soon. This guidance doesn’t apply to housing associations or councils (there is separate guidance and obligations for these providers) but it does cover a significant number of people providing accommodation in existing residential premises, including:
- Hotels, tourism, hostels, refuges;
- Holiday lets and holiday complexes, camping and caravan sites;
- Bunkhouses, bunk barns;
- Sleeping accommodation for pupils, students or employees;
- All types of housing in multiple accommodation; and
- Boarding houses, guest houses and bed and breakfast accommodation.
8.4 Social Housing in Scotland
Published in February Social Tenants in Scotland 2016 is the second annual statistical compendium publication on social tenants and social rented housing in Scotland, covering topics such as stock, household characteristics, housing flows, and rents and income levels.
- There were an estimated 1.17 million people living in social rented housing in Scotland in 2016, a similar figure to the estimated 1.14 million people in the previous year.
- Social rented housing stock in 2016 was provided by 161 housing associations and 26 out of 32 local authorities. (With six authorities no longer managing housing stock due to previous stock transfers to housing associations).
- Social rented housing stock in 2016 totalled 594,458 units (316,553 local authority properties and 277,905, housing association properties), a slight decrease of 594 (0.1%) homes from 595,052 units in 2015.
- In 2015 Scotland had a higher proportion of social renting stock (23%) compared to both England (17%) and Wales (16%).
You can download the full report here
8.5 Housing Amendment Bill Passes Committee Stage
The Bill is intended to pave the way for the Office for National Statistics to reclassify Registered Social Landlords (RSLs) back to the private sector in the UK national accounts. While the Committee was “broadly content” with its proposals, it has outlined some potential issues with the Housing (Amendment) (Scotland) Bill for the Scottish Government to consider.
9.1 Consultation on Regulations and Guidance Relating to Safeguarding Property in Abandoned Rented Dwellings
Section 220 of the 2016 Renting Homes Act (yet to be commenced) provides the ability for a landlord to repossess a dwelling which has been abandoned by the tenant, without recourse to the court.
The law regarding how landlords deal with property left at an abandoned dwelling is currently complex and unclear. There exists a mixture of common law and legislation which may apply differently depending upon the particular circumstances, including whether the landlord is a local authority, housing association or private individual. The proposed Regulations will apply to all landlords under the Act, i.e. both private and community/social landlords. The purpose of the Regulations is to ensure a tenant’s personal property is dealt with appropriately by a landlord, having had regard to its value and the associated costs of any storage and/or removal. The intention is to provide sufficient time for the tenant to recover the personal property without placing undue financial burdens on a landlord.
The closing date for replies is 6 April 2018.
On 13 February the government announced it would go ahead to bring proposals for a vacant land tax. It is hoped that a tax on vacant land could prevent the practice of land banking and land not being developed within the expected timescales.
Reference was made to such a tax in the Republic of Ireland where a vacant sites levy could provide an example of how a vacant land tax could work in Wales. That levy allows councils in Ireland to charge 3% of the market value of vacant sites left undeveloped in 2018 and came into force last month with the rate to rise to 7% in 2019.
9.3 Rent Smart Wales & Licensing of PRS
Landlords in Wales who manage their own properties are reminded that they must submit their licence application to Rent Smart Wales to avoid prosecution.
A number of landlords who have failed to become licensed were recently successfully prosecuted at Cardiff Magistrates Court. One landlord was fined £3600 plus over £600 costs.
9.4 Response to Proposed Ban on Fees Charged to Tenants in PRS
A summary of the responses received was published on 28th February. Key consultation findings include:
- 56% of all respondents agreed with an outright ban on unnecessary fees
- When fees are charged, tenants say that, on average, they are charged £249.47 to begin a tenancy, £108 to renew a tenancy and £142 at the end of a tenancy
- 62% of tenants said that fees have affected their ability to move into a rented property, while 86% say that fees have affected their decision to use an agent
- 61% of landlords did not know what their tenants were charged by their agent.
10. TOPIC OF THE MONTH – Will Commonhold Take Hold?
The recent government consultation on Tackling unfair practices in the leasehold market has raised wide-ranging questions concerning the future of leasehold. One of these is whether or not commonhold - after more than a decade in the wilderness – should be back on the table for discussion as an alternative form of tenure.
Fewer than 20 commonhold developments have been created since the Commonhold and Leasehold Reform Act 2002 came into force despite, at first glance, providing an attractive alternative to leasehold.
Unlike leasehold, commonhold allows a person to own a freehold ‘unit’ (their flat) outright and at the same time become a member of a ‘commonhold association’ - a company set up to manage the communal areas and buildings. There is no landlord, no ground rents, no complex leases and no time-limited, depreciating asset. So far, so good. So why has the system proved so unpopular?
Some of the key issues around the law as it stands include:
- Commonhold is based on company law. Commonhold associations are companies with limited liability that cease to exist if the association is struck off the companies’ register. This leaves a number of grey areas around debt recovery and governance;
- Developers have no incentive to build commonhold developments because they can’t make money from ground rents or enfranchisement;
- Lenders don’t like the uncertainty surrounding the perceived dangers of termination of commonhold associations and potential loss of asset;
- There is no requirement for service charge monies to be held in trust;
- There is no right for residents to challenge charges as being unreasonable; and
- Any statutory requirement for commonhold associations to insure their blocks in unclear.
On the eve of the Law Commission’s Call for Evidence on commonhold, three industry experts took centre stage at ALEP’s first annual lecture in February to discuss the reasons why commonhold has been so unsuccessful and to suggest what could be done to make it more attractive.
According to Peter Haler from Leasehold Forum, ALEP’s first speaker, and a former CEO of LEASE, the 2002 Act was badly conceived from the start. As former chair of the Commonhold Working Party, Peter carried out extensive research into other forms of community ownership that have been successfully used elsewhere in the world. He questioned why we seem unable to find a fair and workable system of flat ownership when other countries can and he used examples from Australia and the USA to prove his point.
Ultimately, Peter believes the Act as it exists today is not fit for purpose and is not fixable. Proper reform is needed “to produce a system that we can all understand and which will encourage investment and flexible development,” he concluded.
Author and solicitor Professor James Driscoll, then set out his view that commonhold could work but would need active government support to make it easier for leaseholders to convert to commonhold and to make leasehold development less attractive. “To have a chance of working, the government needs to deal with lenders’ concerns and sort out shared ownership,” he said.
Professor Driscoll believes that commonhold has many advantages over the leasehold system – which Peter Haler said had produced around 36,000 complaints from flat owners every year that he was CEO of LEASE. However, if the government is to make the system work it must address a number of issues including making leasehold developments less attractive by abolishing ground rents for new leases and putting in place a ‘sunset clause’ i.e. not permitting any new leasehold development after a specified date. “Government support will be vital if commonhold is relaunched,” he said.
The final speaker of the day was Philip Rainey QC from Tanfield Chambers who agreed with Peter Haler that simply amending current commonhold legislation “is not good enough”. If commonhold is to work, he said, it must not be unworkable for developers in the real world: it has to be profitable or they won’t build new developments; and it must not be less profitable than leasehold.
“A new Act would be preferable to amendment,” he said, concluding that the government needs to kick-start commonhold by ensuring that public-sector land takes the lead and putting a serious effort into marketing the concept.
Following a lively debate and Q&A session, host Damian Greenish from Pemberton Greenish concluded: “there seems to be real intent…to bring forward commonhold in some form. The government must get it right and I’m delighted that the Law Commission is looking into it. I sense a real desire to do something to reform the current leasehold tenure and it’s vitally important for all professions in the sector to make our views known”
IRPM
28 February 2018 - Associate Exam in London & Manchester
21 March 2018 - Member Exam Workshop - London
22 March 2018 - Member Exam Workshop - London
25 April 2018 - Member Exam in London & Birmingham
23 May 2018 – Annual Seminar - London
15 August 2018 - Associate Exam Workshop - London
16 August 2018 - Associate Exam Workshop - London
11 September 2018 - Associate Exam in London & Birmingham
03 October 2018 - Member Exam Workshop - London
04 October 2018 - Member Exam Workshop - London
30 October 2018 - Member Exam in London & Manchester
ARMA
To book ARMA training courses
IRPM members (associates and above) can attend ARMA courses at the discounted ARMA members rate.
Reading leases London 22/3/18
Legal day for a new PM London 13/3/18
S20 Issues London 06/03/18
Intro to Residential Property Management London 21/3 & 25/4
LEASE Webinars
LEASE has many webinars held previously on a wide range of subjects and are free to download.
Brethertons Webinars
IRPM members get a substantial discount on the charges for these webinars.
ARLA Propertymark
To book courses for 2018.
Chartered Institute of Housing
For more information on their events visit their website.
Introduction to leasehold management – London 15/3, 11/10/18 & Coventry 3/7/18.
RTB & RTA- London 16/11 & Coventry 3/7/18.
National Leasehold Group
For their seminar listings
RICS (open to non-RICS members)
For all RICS courses
CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT
You can see an overview of all the training and courses available from the CIPD website.
