The month in brief
Welcome to the March issue of the Technical Update
This month we report on the introduction of new tests for non-ACM cladding, while the row over who pays for reinstatement rumbles on.
We look at three key factors in fire safety: fire doors, escape plans and sprinklers; and we take a closer look at co-living schemes. We also update you on the recent changes to VAT on staffing costs and the implications for RMCs and RTMCos.
If you are keen to upgrade your IRPM membership to Associate level, we now have a fast-track route to qualification that is well worth considering. Scroll down to IRPM News in this issue to find out more.
And finally, don’t forget to book your tickets for the 2019 Annual Seminar. It’s only three months away and it’s going to be an event that’s really worth taking time out to attend – so don’t miss out.
As always, do contact us with your news, views or queries by emailing the Editor at lesley@ davisaylingmedia.co.uk
IRPM News
CEO’s column - How well are you managing? | Brethertons is platinum sponsor of 2019 Annual Seminar | Get on the fast-track to Associate membership
In the news
Residents spared £3m cladding bill on Lendlease block | Housing Secretary slates new leasehold portal | Government reveals materials for new cladding tests | Tall buildings up by 300% in London, survey reveals
What’s new in HR?
Staff mental health policy is a first for property management sector
Fire safety
Three-quarters of composite fire doors failed safety tests | Government fire safety guidance fails to include escape plans, RIBA warns | LFB urges public to lobby MPs over sprinklers
PRS and B2R
New urban community planned for York | Another 250 B2R homes for London in £100m-plus deal | Anaconda Cut is second tallest tower in UK
Social housing
Man Group to be social housing provider | London Mayor lobbies for new funding model
Scotland and Wales
Scotland takes action against flooding | New fire safety standards for Scottish homes
Legislation
Victory for human rights in High Court case | Tenant Fees Act now on statute book
Legal update
Mark Loveday looks at this month’s key cases
Talking points
Is it time to scrap leasehold?
VAT on staffing costs: implications for RMCs
Topic of the month
Could you manage a co-living scheme?
IRPM events
What’s happening when and where?
Being a property manager can be a tough gig, says Andrew Bulmer, so it is important to take wellbeing seriously
I don’t mean, are you managing your estates to a high standard? No, what I’m asking is, how are you doing? I ask, because my time as a property manager wasn’t always happy. Some days were good, some were not and there were times when I’d cheerfully have gotten on a plane and not come back.
But really, is property management such a tough gig, compared to being say, a prison officer, or A&E staff dealing with aggressive drunks on a Saturday night? I hesitate to draw direct comparisons with such roles, but in truth I do think it is a difficult job. The core functions of the job are do-able, but sometimes poor relationships with customers make it far harder than it needs to be.
Why so? Both residents and managers want well run estates, ticking over happily; surely objectives are aligned? Yet it isn’t always a happy state of affairs. Certainly, there are difficult customers, but that applies to most businesses. Also, history bites us every day; that old world of landlord and tenant, us versus them, legalistic structures with relationships defined by contracts drafted by lawyers; almost designed to be adversarial and divisive. Take communication; we discuss major works with our customers by serving a series of legal (s20) notices on them. It lacks charm, to say the least.
There are deep-seated, often historical reasons why our sector can bring out the worst in people and when you dial in a lack of trust on both sides, you have all the ingredients for conflict. Too often the customer/property manager relationship is stressing out both sides. Some managers report they feel ‘beaten up’, mentally if not physically. Staff churn in some firms is way too high, as managers switch jobs or leave the sector entirely. Being unhappy doesn’t just harm the individual, it harms your business. So, I ask again, how are you doing? Are you managing well, or checking out flight times?
We are asking that question at the IRPM Annual Seminar this June. How do we look after our own wellbeing as well as our customers? Happily, many of the changes coming give us the chance for better relationships and IRPM is starting that conversation now. The response from business leaders has been powerful and positive. For today, start simple. Just ask around your team. How are you doing? Ask twice. How are you doing? The answer might be uncomfortable, but like a leaking roof, a problem ignored is not a problem solved. Employer or employee, the MIND web site has some useful strategies and support.
Scroll down to What's new in HR in this issue to read about the way one property management firm is dealing with staff wellbeing.
It's good to talk. So, don’t forget to book your free one-to-one with industry experts and specialists at the Annual Seminar. Quiet space ‘Consultation Bubbles’ just off the main exhibition area give you the chance to pick the brains of the best, for free. And if you haven’t booked your ticket yet, crack on, as the event is already nearly sold out!
Andrew Bulmer is IRPM CEO
Brethertons is platinum sponsor of the 2019 IRPM Annual Seminar
The IRPM is delighted to confirm that Brethertons is the platinum sponsor of this year’s Annual Seminar, taking place on Thursday 13 June at the QEII Centre in Westminster.
If ever there was a year to come to the biggest event of its kind in the block and build-to-rent management sectors, this is it! We will be tackling the important questions for our sector including:
- The latest thinking around the Law Commission’s proposed reforms
- Updates on government plans for regulation, a code of practice and your qualifications
- “It’s the economy stupid!” Where now for UK plc?
- What does all this mean for my agency and for me?
- Plus all those essential updates and “need-to-knows”
Brethertons’ Residential Leasehold Partner, Roger Hardwick and Senior Associate Bukola Obadun-Craigs will provide the Legal Update at the seminar.
New for 2019, is the introduction of Consultation Bubbles, which provide delegates with the opportunity to meet and do business with leading industry experts.
For the first time this year we have introduced ‘Consultation Bubbles’ where you can get free expert advice. Experts from various industry fields will be available to you throughout the day. Guarantee a slot and book a consultation right now! Click on the sponsor’s name below and fill in the form.
- Brethertons
- Abbatt Property Recruitment
- Barrett Corp & Harrington
- Dean Wilson LLP
- Data Energy
- 4Site
- Fixflo
- Future Group
- Seclec
Brethertons’ Consultation Bubble will cover the full spectrum of residential leasehold legal issues from service charge recovery and disputes, applications to appoint a manager, applications to vary leases, ground rent sales and purchases to lease compliance as well as dispute resolution, company commercial and employment law. Places are limited on the day so Brethertons is urging delegates to book early and secure their slots with its leading specialists in the industry. The process is simple and free and can be done via the link above.
Alison McCormack, Brethertons Director of Legal Services (Property), said: “We are absolutely thrilled and very proud to be the Platinum sponsor for the IRPM Annual Seminar 2019. It’s an exciting time for us and the industry alike. We house an incredible team of highly experienced lawyers, who are directly involved in advising and influencing reform within a number of boards and working parties, including the Law Commission on its eagerly awaited consultation paper on reform of the Right To Manage (RTM). We look forward to an informative day, where we are excited to catch up with existing customers. We are also looking forward to making new contacts by sharing our expertise and views from within the sector.”
In 2018, the IRPM Annual Seminar attracted more visitors than any other UK block/BTR conference and we anticipate the same take-up for 2019. Tickets are priced at just £99 for members and places are limited so book yours now. We look forward to sharing the day with you.
Get on the fast-track to Associate membership
As reported in the February issue of the Technical Update, the IRPM is partnering with PM Legal Services to pilot the first of our fast-track Associate programmes, giving you the competences you need to qualify for Associate membership.
Taking place at St Hugh's College, Oxford over the weekend of 29th-31st March, the fast-track programme will give you the confidence to sit the Associate exam as soon as you finish the course. PM Legal Services have drawn together leading speakers from across our industry, ready to deliver keynote presentations, breakout sessions and Question Time sessions. The pilot price of the IRPM programme is £185 plus the PM Legal event ticket and the whole package includes:
- Conference and training materials
- Lunch on Saturday, dining on Friday and Saturday evening
- Tea and coffee refreshments throughout the weekend
- Exam and assessment
Anyone who is interested in joining us for the weekend should have one year's relevant work experience and have fulfilled and recorded up to date IRPM CPD requirements. Successful candidates will be offered an upgrade to IRPM Associate (AIRPM) membership.
For further details you can contact the IRPM by calling us on 020 3319 7575 or [email protected] with ‘IRPM Fast Track Associate Programme’ in the subject line.
PM Legal is offering a discounted ticket price for delegates that are attending as part of the IRPM fast track programme to £300 plus VAT. Please contact PM Legal direct to book.
In the news
Residents spared £3m cladding bill on Lendlease block
A consortium including Lendlease has confirmed it won’t pass the cost of cladding replacement onto residents at their Vallea Court and Cypress Place developments in Manchester. Lendlease was the original developer of the two blocks but sold the freehold to property investor Pemberstone in 2015 (source: Inside Housing).
Residents have been calling on Lendlease to help with the costs of replacing the ACM cladding for more than a year. The consortium’s offer means residents now won’t have to pay the huge bill for replacing the cladding, which would have meant each flat owner paying more than £10,000.
Housing Secretary slates new leasehold portal
Last month, London Mayor Sadiq Khan announced the Greater London Authority’s new online portal for leaseholders. This service aims to help both new and existing leaseholders by offering information such as the difference between leasehold, freehold and renting and how to buy a freehold flat, as well as advice on how to pursue tribunal proceedings against a freeholder.
As LEASE already provides an advice service for leaseholders, Housing Secretary James Brokenshire criticised the move, saying, “A key feature of providing advice and support to leaseholders is ensuring a single point of access and information…This move just adds more confusion to what for many is a complicated issue.“
Government reveals materials for new cladding tests
The government has revealed a list of the non-ACM materials that will be examined by BRE in a series of new cladding fire tests (source: futurebuild).
Last year, the MHCLG announced that it planned to widen the scope of its ACM cladding tests following the Grenfell Tower fire. The risks of non-ACM cladding will now be investigated by the BRE in order to determine whether or not further action needs to be taken by building owners of blocks clad in non-ACM materials.
Housing minister Kit Malthouse has confirmed a list of materials involved in the new tests. These are: zinc composite material, copper composite material, aluminium honeycomb, high pressure laminates, brick slip systems and reconstituted stone.
“Where the composition varies between products within one of these generic material types, more than one product will be investigated,” said the Minister.
The aim of BRE’s research is to provide technical information about the fire performance of the cladding that can be used to demonstrate compliance with requirement B4 of the Building Regulations 2010.
Tall buildings up by 300% survey reveals
New London Architecture (NLA) has announced the results of its sixth London Tall Buildings Survey, capturing the capital’s changing skyline. Working with property consultancy GL Hearn, the study provides the only comprehensive analysis of all tall buildings – those exceeding 20 storeys - which are proposed, in planning or under construction in London.
The latest findings show that tall building delivery in the capital is at its highest point in history, with up to 76 tall buildings set to be completed in 2019, a three-fold increase on 2018. There has also been a significant increase in the permission rate, increasing to 291, from 267 in 2017.
To read more about the survey here.
What’s new in HR?
Staff mental health policy thought to be first for property management sector
In what they claim might be a first for the sector, Weston-Super-Mare property management firm Mcilroy Smith has launched a mental health policy for its employees in order to promote personal wellbeing in what can be a stressful business environment (source: Letting Agent Today).
Managing director Andrew Simmonds told the magazine: “My own business background and experiences convinced me that wellbeing in the workplace was far more than a box-ticking exercise. After a prolonged and highly stressful business separation I found myself under so much pressure I suffered serious depression and anxiety, even sudden heart problems where paramedics were blue-lighted to me one afternoon.” As a result, he is determined to ensure his employees aren’t exposed to similar strains.
“Our industry is client-facing and is, by nature, highly demanding… Our clients expect an immediate response to any issues they raise – no matter what [the] time of day. Abusive calls and emails from annoyed residents are often seen as part of the job but can cause enormous stress to the person concerned.
“If staff are on call 24-hours a day, it’s essential to allow flexible working patterns and we encourage members of staff to take breaks during the day, visit the gym and get out to the pool for relaxation. Not only do I want to engage the best colleagues, but I want to ensure people fit in to the business.”
Simmonds says they ensured all clients were made aware of their wellbeing policies and duty of care to employees before proceeding. “We tell all our clients from the outset ‘we have lives too’. We will support you if there is an out-of-hours emergency but we would hope they respect the fact we too have a private life.”
Fire safety
Three-quarters of composite front doors fail fire tests
The government’s expert panel on fire safety said there was “a performance issue with GRP composite 30 minute fire doors across the market”, according to a document titled Fire door testing: GRP composite test results published by the MHCLG in February (source: Inside Housing). In order to comply with the building regulations, these doors are frequently used as front doors to flats but only three of the 12 doors tested were able to resist flames and smoke for the required 30 minutes. Two of the doors tested offered protection for less than 10 minutes and separate tests on Manse Masterdor products – which were used at Grenfell Tower – only passed four doors out of 20.
The government said the results had been published “to inform building owners risk assessments and plans for fitting and repair or replacement of fire doors”, but does not make any recommendations. Instead, it said building owners should determine for themselves whether and how quickly doors which have failed tests should be replaced, based on fire risk assessments.
The Association of Composite Door Manufacturers is currently producing a plan of action for the repair and replacement of faulty doors.
Government fire safety guidance fails to include escape plans
RIBA has called for extra measures providing guidance on escape plans to be included in Approved Document B, which deals with fire safety in buildings. This is being revised in response to the Grenfell Tower fire in June 2017 but, according to the RIBA, changes made already did not include guidance on escape policies that could be used when the stay put policy in a building is no longer appropriate. A consultation on the new guidance closed on 1 March.
“For too long government and the construction industry have relied on building design and construction that meets the regulatory requirements to resist the spread of fire, while the requirements for means of warning and escape and access and facilities for the fire service have been increasingly deprioritised in technical guidance over decades,” said RIBA.
The RIBA is also calling for:
- at least two staircases in new multiple occupancy residential buildings;
- the introduction of centrally addressable fire alarms, which allow fire crews to quickly find which alarm has been activated; and
- sprinklers to be fitted in all new and converted residential buildings and retrofitted in existing residential buildings above 18 metres.
Jane Duncan, chair of RIBA’s expert advisory group on fire safety, said: “We simply cannot allow buildings to continue to be built to regulations and guidance that everyone, including the government, acknowledges are deeply flawed.”
LFB urges public to lobby MPs over sprinklers
The London Fire Brigade is fed up with developers ignoring its advice on fitting sprinklers according to a new LFB report published in March. In response to what it considers a dangerous policy by developers, the LFP is urging the public to take direct action and lobby parliament on the subject.
“We’re asking the public to contact their local MP about whether new buildings in their area have sprinklers fitted to help make the point that stronger regulation is needed,” says the LFB.
“Every year, we inform thousands of London developers that sprinklers are a crucial recommendation for their planned build. An audit of purpose built flats built or refurbished in 2016 found only two out of the 15 blocks spot checked had sprinklers fitted.”
The LFB wants the law changed to make sprinklers a key component of fire safety measures. The call comes as the Government consults on building regulations in Approved document B that include a section on sprinklers and other fire suppression systems.
In particular the LFB is calling for sprinklers to be fitted in:
- All purpose-built blocks of flats (or all blocks over six storeys at the very least).
- All homes where vulnerable people live.
- All buildings housing vulnerable residents such as a care homes or sheltered accommodation.
London Fire Brigade Commissioner Dany Cotton said:
“As well as covering new builds, we want the Government to look urgently at new regulations to require sprinklers to be retrofitted in older residential blocks and any building housing vulnerable people.
“Our spot check shows that the building industry cannot self-regulate on sprinklers and so the Government must step in. Although we are telling developers that sprinklers will save lives, in most cases we can’t force developers to fit them and it’s very difficult to follow up on whether our life saving advice was incorporated into the build. Scotland and Wales have managed to take proper action on sprinklers and now England has to step up.”
Read more about installing sprinklers in the buildings you manage.
PRS and B2R
New urban community planned for York
Moda Living and joint venture partner Apache Capital Partners have partnered with UK-based firm North Star to develop plans to transform a derelict 9-acre, former gasworks in York into a new neighbourhood of around 700 new homes. The £200m GDV scheme will give a significant economic boost to York.
Sitting vacant for over 10 years, the brownfield site will be transformed into a new residential community, with plans that could also include retail space, café or community use. There are also plans to re-connect the existing surrounding neighbourhoods by adding extensive public realm and introducing new pedestrian and cycle links.
Subject to consent, plans include 450 homes designed for rent that Moda will own and operate for the long term, plus 260 homes that will be developed by North Star for sale.
Residents at Heworth Green will benefit from round-the-clock professional management with an on-site team in place to take care of any issues. The MyModa app will allow them to pay bills, organise social events and also act as a digital door key. Residents will benefit from flexible contracts with no fees or deposits in a secure and inclusive environment. This will be Moda’s second scheme in Yorkshire and it’s tenth in the UK.
Another 250 B2R homes for London in £100m-plus deal
More than 250 new units built by Telford Homes are to be used for build to rent according to a deal announced by European property investment platform Henderson Park and B2R specialist Greystar Real Estate Partners in February. They have exchanged contracts with Telford Homes to acquire all 257 properties within the Equipment Works development site in Walthamstow, London at a cost of £105.5M. The Henderson Park and Greystar joint venture B2R portfolio now includes around 1,000 units in London.
Anaconda Cut is second tallest tower in UK
The 131 metre tall Anaconda Cut scheme in Salford was officially launched in February. The 44-storey tower, which features 349 flats, is funded by Europa Capital and is the tallest building in Salford and the UK’s second tallest B2R tower in the UK after Uncle in London's Elephant & Castle.
American B2R provider Atlas Residential is managing the scheme, which offers renters luxury accommodation and amenities that aim to match those provided by the hospitality sector. Unusually, the development is also pet-friendly, allowing residents to bring their animals along with them and the option to leave them behind with an onsite pet concierge.
Social housing
Man Group to be social housing provider
According to a report in Inside Housing, the world’s largest publicly traded hedge fund company is to launch its own social housing provider. The Man Group, famous for sponsoring the Man-Booker literary prize, manages $114.1bn worth of funds and said in February that it aims to deliver homes for social and affordable rent, shared ownership and Rent to Buy as well as for market rent and sale.
The Group announced that it aims to enter into long-term management contracts with social landlords and will launch a new ‘community housing’ team, led by head of community housing and portfolio manager, Shamez Alibhai. Commenting on the Group’s new venture, he said: “The scale of the housing shortfall across the UK requires innovative solutions to enable all types of households to help meet their housing aspirations and needs. Man Group’s resources and commitment to socially responsible investing provide a strong foundation for pursuing our goal of alleviating this problem.”
Man Group is the latest in a series of private investors to take an interest in social housing, following leading private equity specialist Blackstone and institutional investor Legal & General into the sector.
London Mayor lobbies for new funding model
The Mayor of London Sadiq Khan, is lobbying government to find a new model for funding affordable housing based on higher rates of grant.
Housing associations with open market sale exposure in London are finding themselves increasingly affected by a slowdown in the market as the uncertainty surrounding Brexit is leading buyers to pause, Mr Khan told Inside Housing last month. He believes the existing cross-subsidy method of funding is broken and new solutions must be found.
At present housing associations and other housing providers build market-value luxury housing and sell them off and use that to build more affordable housing. However in a falling market, this model clearly has limitations. “So we are doing two things,” said the Mayor, “We are lobbying government and asking them to give more support, and we are talking to housing associations about what they need.”
Scotland and Wales
Scotland takes action against flooding
Communities across Scotland are to receive more than £700,000 in additional funding this year to improve flood protection. This includes £300,000 to support the Scottish Environment Protection Agency (SEPA) in its role as the national flood forecasting, flood warning and strategic flood risk management authority this year. It is also proposed to increase this by a further £200,000 to £1.6 million for 2019/20.
The ‘Scottish Flood Forum’ will receive £33,000 in 2019/20 to work with stakeholders to raise awareness of the importance of making flood resilient repairs and installing flood protection measures for property.
New fire safety standards for Scottish homes
New rules to reduce deaths in household fires in Scottish homes have been announced. The new regulations will mean every home in Scotland must have a smoke alarm fitted in the living room or lounge, and in circulation spaces such as hallways and landings. The changes also mean every kitchen must have a heat alarm, and the alarms will have to be interlinked so they can be heard throughout the property. There must also be a carbon monoxide alarm where there are fixed combustion appliances. The regulations come after a consultation carried out following the tragic events at Grenfell Tower in London in June 2017. And they mean that the fire safety standards which now apply to private rented property and new-builds is being extended to all homes in Scotland. The changes come into force in February 2021.
Other measures to improve fire safety announced by the Ministerial Working Group on Building and Fire Safety, include sound alerts for evacuation in high rise buildings and extending the mandatory installation of sprinklers in new flats.
Legislation
Victory for human rights in High Court case
The High Court has ruled that the government’s Right to Rent scheme breaches human rights law.
Right to Rent was introduced by Theresa May when she was Home Secretary. It was a key aspect of the Government’s ‘hostile environment’ for illegal immigrants and made landlords responsible for checking the immigration status of tenants. The initiative has consistently proved controversial with both landlords and with human rights campaigners.
In 2018 the Joint Council for the Welfare of Immigrants (JCWI) brought a case against the government, supported by The Residential Landlords Association (RLA) and Liberty, claiming the policy is incompatible with human rights on the grounds that it drives discrimination against non-UK nationals who might be in the country legitimately and British ethnic minorities.
Delivering what the RLA describes in Letting Agent Today as "a damning verdict", in the High Court today Mr Justice Martin Spencer ruled that the scheme does breach the European Convention on Human Rights and that discrimination by landlords is taking place “because of the Scheme.” He found that “the safeguards used by the Government to avoid discrimination, namely online guidance, telephone advice and codes of conduct and practice, have proved ineffective” and concluded that “the Government’s own evaluation failed to consider discrimination on grounds of nationality at all, only on grounds of ethnicity.”
The RLA is now calling on the government to accept the decision, scrap the Right to Rent, and “consider what else can be done to sensibly manage migration, without having to rely on untrained landlords to do the job of the Home Office.”
Commenting on the High Court ruling, Andrew Bulmer, IRPM CEO, said: “If the objective was to control illegal immigration, then this policy was never going to work well and would lead to the issues that the High Court have so robustly describes. Trusted voices in industry said so at the time. Why does this matter? Because this was legislation drawn up to address a political agenda; never a good idea. We must avoid the same mistake reforming our tenure laws.”
BREAKING NEWS: As this issue of the Technical Update went to press, The Home Office announced plans to reassess Right to Rent in light of the High Court ruling.
Tenant Fees Act now on statute book
The Tenant Fees Bill, banning landlord and agents from charging fees to tenants, has become an Act of Parliament after being given Royal Assent last month. From 1 June 2019, private sector landlords and agents will not be allowed to charge tenants a fee to set up or renew a tenancy. The majority of other upfront fees payable by tenants will also be outlawed and the amount of refundable security deposit a tenant is required to pay will be capped at the value of five weeks’ rent. Holding deposits too will be capped at one week’s rent.
Legal update
Fearn v Trustees of the Tate Gallery
How much privacy are flat owners entitled to? Mark Loveday looks at a recent case that tested this question in court
The claim in the case of Fearn v Trustees of the Tate Gallery [2018] EWHC 246 (Ch), heard by Judge Mann J, in February, related to a public viewing platform on the tenth floor of the Tate Modern in London. The gallery overlooked a modern residential development around 35m away, with striking floor to ceiling windows. As a result, visitors using the platform could see into the living areas of the flats. There was evidence that there were up to 300 visitors at a time on the viewing platform and that a significant minority waved and shouted at the occupiers of the flats, took photos and posted pictures of the interiors of the flats on social media. The owners of the flats brought a claim for private nuisance against the trustees of the gallery.
Mann J reviewed the principles of private nuisance as applied to windows and overlooking, as well as the flat owners’ rights to privacy under Article 8 of the European Convention on Human Rights.
The judge was “minded to conclude” that as a matter of principle “the tort of nuisance would probably have been capable … of protecting privacy rights, at least in a domestic home”. In particular, “a deliberate act of overlooking could amount to an actionable nuisance”. He gave the example of “one neighbour who erects a viewing tower whose only purpose is to enable views into the gardens and houses of other neighbours, and who then charges an entry fee to allow members of the public to come in and do just that”, which would be likely to fall within the constituent parts of the law of nuisance. Even if the motive was merely mercenary, as opposed to malicious, it would still be capable of being a nuisance.
Any doubt has in any event been removed by the right to respect for an individual’s “private and family life … [and] home” in the Human Rights Act 1998 and Article 8: see McKennitt v Ash [2008] QB 73.
But that did not mean that all overlooking becomes a nuisance. Whether anything is an invasion of privacy depends on whether, and to what extent, there is a legitimate expectation of privacy. That inquiry is likely to be closely related to the sort of inquiry that has to take place in a nuisance case into whether a landowner’s use of land is, in all the circumstances and having regard to the locality, unreasonable to the extent of being a nuisance.
Nevertheless, the judge held there was no nuisance. He relied on the following:
- The character of the locality. This was “urban south London” where an occupier can expect rather less privacy than a rural occupier. The judge said that “anyone who lives in an inner city can expect to live quite cheek by jowl with neighbours”.
- The use of the gallery’s land was not in itself unreasonable. A viewing platform for tourists was not “inherently objectionable”. The purpose of the platform was not to enable tourists to gaze into the rooms of the flat owners.
- The nature of the flats was a “particularly sensitive one”. If the flats had conventional windows and frames, there would not have been any nuisance claim because (i) they would have not attracted the gaze of tourists, and (ii) the occupiers would have been less exposed. The judge said that “if the claimants have a design which raises the privacy invasion then they have created their own sensitivity and will have to tolerate what the design has created”.
- Moreover, there should be an element of ‘give and take’. The occupiers of the flats could have taken remedial steps such as using solar blinds or installing net curtains.
Other must-read cases
Rogerson v Bolsover DC [2019] EWCA Civ 226. There was insufficient evidence to establish that a local authority landlord had a duty under the Defective Premises Act 1972 s.4 to institute a system of regular inspection of a property. But in respect of the inspections it did carry out, the landlord had not complied with its duty to its tenant under s.4(1) to take reasonable care. It failed to undertake a simple pressure test which would have revealed the “clear and obvious safety risk” posed by a corroded manhole cover in the garden of the tenanted property.
Mark Loveday is a leading Barrister with Tanfield Chambers specialising in leasehold management and enfranchisement work
You can find more case law on the Resource Hub, updated on a regular basis.
Talking points
Is it time to scrap leasehold?
Launching the GLA’s new online leasehold advice portal in February, London Mayor Sadiq Khan drew attention to the problems still being faced by leaseholders and called for reform in our sector to be prioritised. The government now has leasehold in its sights, with a number of important reviews and consultations underway and we are soon likely to see some big changes in our sector.
But instead of just tinkering around the edges, should we simply scrap leasehold tenure altogether? It’s a complex system that few leaseholders fully understand and many do not benefit from, so should the property industry simply call time on it?
This is certainly what the Federation of Private Residents’ Associations (FPRA) thinks and it has submitted its reasoning to the Law Commission in response to its recent consultation on Leasehold Home Ownership: buying your freehold or extending your lease.
Their submission makes for interesting – and radical – reading. Leasehold has been effectively brought to an end in Scotland. The FPRA believes the law for England and Wales should be brought up to date on the same or similar lines. The leaseholder group is concerned that the reforms currently in progress are in danger of causing even more confusion among leaseholders: “We could end up with a mess of uncoordinated and possibly conflicting legislation” they say. Instead, change should be “simple, easy to understand and easy to apply” and new legislation should be brought in to “wipe away numerous separate and superimposed Acts”.
Leasehold flats are a ‘wasting asset’ and this too is “wholly unreasonable” according to the FPRA. Anyone who works in the sector will instantly recognise this scenario which illustrates perfectly the problems faced by flat owners. Two flats – one leasehold and one freehold - can be sold for similar amounts. The leasehold flat then requires, in some cases, up to tens of thousands of pounds of extra payments over the years to keep and possibly then to extend the lease. The freeholder has no such obligation to part with his or her money. How can this be fair, asks the FPRA?
Lack of autonomy over what happens to the buildings they live in and the legal requirement for 66% of flats in a building to be owned by leaseholders before they can get enfranchisement, are also highlighted by the FPRA and deemed unacceptable.
The organisation believes the current leasehold system is antiquated. They say there is no reasonable argument for a situation in which home ‘owners’ are in thrall for years, decades and even generations, to a separate landowner to whom they must pay thousands of pounds and who has ultimate decision-making rights over their homes.
They may be right but what’s the alternative? Abolish leasehold completely, says the FPRA. Give all existing leaseholders the right to buy their freehold – any change in the law needs to address this situation so that any leaseholder can get enfranchisement.
But surely ditching leasehold isn't really that simple? What impact would outright abolition of the tenure have on property managers and their clients? The Law Commission consultation closed in January but further consultations on Reinvigorating commonhold and on right to manage are still open. So if you have a strong view on leasehold tenure, now is the time to have your say.
VAT on staffing costs: implications for RMCs
The subject of VAT on the cost of directly employed staff at residential blocks rumbles on. There is still not complete clarity on this issue, particularly where RMC and RTM companies are concerned.
Managing Agents used to be granted a VAT exemption by HMRC on costs relating to the wages recharge for all staff working at developments who are directly employed by the agents, such as the estate management team, concierge, security etc. The same VAT exemptions also applied to staff employed directly by RMC and RTM clients.
All this changed last year, as reported in the December issue of the Technical Update. Following lobbying from the industry, in September 2018 HMRC clarified their position and stated that this exemption could no longer be applied across the residential property management industry with effect from 1 November 2018. Also, the provision of staff by RMC and RTMCo clients is now treated as a supply of services to the freeholder, which is subject to VAT if the annual payroll is above the annual VAT threshold of £85,000.
This means that any RMC/RTMCo who is also an employer of staff on site, will now need to raise a monthly invoice for the staff costs (including on costs such as employers national insurance and pension costs), add VAT to this staff cost and recoup this from service charge funds. The staff will then be paid from those funds and on a quarterly basis the VAT will be paid to HMRC. As a result, the RMC/RTMCo will have income and costs of the same value (being the total staff cost of the estate). The company will then file annual accounts with Companies House which will no longer be dormant accounts and managing agents will have to deal with the additional administration that is now involved.
As a result of these changes, a member of the IRPM Leasehold Working Group has raised the following point that is worth considering. One of his clients, an RMC, does not need to register for VAT until its turnover hits £85,000. So taking a start date of 1 November 2018 for the new arrangements, VAT will not need to be added to the payroll charges until October 2019, when VAT registration will also take place. This means that three months of the new service charge year to 31 December 2019 will be caught by the VAT charge, leading to a risk that HMRC deems turnover already to be above £85,000. Counsel’s view is that HMRC is very unlikely to go back before the 1 November 2018, which is effectively an amnesty. We will have to wait and see. In the meantime, managing agents should ensure their clients understand the changes and the implications for filing accounts and paying VAT so they are not hit by a nasty surprise further down the road.
Members please note: the IRPM cannot give technical advice. If you are asked to advise your clients on VAT issues, please ensure you take professional advice from a tax specialist.
Topic of the month
Could you manage a co-living scheme?
Build to rent developments are now a common sight in UK cities. Property managers keen to work in this fast-growing sector are having to think on their feet and develop a new skill set for a new kind of housing provision. The IRPM has stayed ahead of the curve, quickly bringing its B2R qualification on line to equip members to take advantage of the new career opportunities on offer.
Co-living schemes, popular in the USA, China and Scandinavia, are now starting to spring up as an alternative to more traditional B2R blocks. With individuals living in small bedrooms but with access to communal kitchens and living space as well as other shared amenities, they offer renters a 21st century version of the house share.
Law firm Collyer Bristow spoke to 424 18-44-year olds living in London and the South East about co-living last year. The company’s Ownership Attitudes and Aspirations Report found that while only a very small percentage of renters currently live in this kind of development, 74% would consider it. Perhaps surprisingly, the research also revealed that co-living appeals equally to older as well as young people. A single monthly payment with no hidden costs was the feature of co-living schemes that held the most appeal for renters. Location was the next most important factor, followed by outside space and proximity to good transport links.
Janet Armstrong-Fox, Head of Private Client Property at Collyer Bristow says the sense of community is important too: “Loneliness is a very real issue for all ages and co-living schemes can and do provide a ready-made community with operators often providing a full programme of events and activities,” she says.
A report published in February by the Social Market Foundation promotes co-living as an answer to the housing crisis and suggests that these developments should be available to buy rather than operators simply sticking with the current rental model. This would make owning a property more affordable, particularly in London. The concept is clearly attracting interest, so it could be time for property managers to take a closer look.
Alex O’Conner, Partner in the property team at Collyer Bristow explains that operators of co-living schemes will typically have to maintain not just the fabric of the building, but manage the communal areas too. If co-living schemes include, for example, communal kitchens, it will be their responsibility to replace white goods and other shared items. It is also in the operators’ interest to do so, as the communities they look to build often gravitate towards these areas. They will of course factor the cost of repairs and maintenance into the rental fee.
Co-living schemes are more likely than traditional blocks to have a concierge and maintenance team on site. Managing on-site staff will fall within the remit of the property manager who can also expect a high level of engagement with residents about the management of the building, events they might like to see organised and to receive feedback on the way the community within their block is functioning.
“With so many people living in close proximity, disputes are inevitable,” says Alex. “Tenants are likely to be provided with an occupation agreement that will set out ‘house rules’ - which might forbid the drying of washing outside, specify what can and cannot be placed in bins and how rooms can be decorated. Occupation agreements will usually also set out how disputes are to be resolved.” Property managers are used to dealing with neighbour disputes but they could find this aspect of their role tested more frequently by co-living developments, where residents are sharing more of their living space.
Alex also comments that “Operators taking deposits from occupiers will need to give thought to whether the deposits need to be protected in a deposit protection scheme”. Where this is the case, he explains that this will need to be communicated to the occupiers in some detail to comply with the regulatory framework.
It is clear that co-living schemes bring their own management challenges to the rental housing mix and property managers considering a move into this sector will need to gain a full understanding of this new approach to renting.
IRPM events
Diary dates are on the Events page
26 March 2019 – Associate Exam in Glasgow
26 March 2019 – Member exam in Glasgow
3 April 2019 – Member Exam Workshop, London
4 April 2019 – Member Exam Workshop, London
9 May 2019 – Member Exam, London & Birmingham
13 June 2019 – Annual seminar
14 August 2019 – Associate Exam Workshop, London
15 August 2019 – Associate Exam Workshop, London
11 September 2019 – Associate Exam, London & Birmingham
11 September 2019 – Member Exam Workshop, London
12 September 2019 – Member Exam workshop, London
26 September 2019 – AGM 2019
26 September 2019 – Fellows Day 2019
15 October 2019 – Member Exam, London & Manchester
