IRPM news
Andrew Bulmer: Take the time to talk | IRPM Annual Seminar | Where is the customer in your business strategy?
Media reports
Experts refute ABI cladding claims | Residents consider class action over Grenfell-style cladding | Resolution Foundation calls for long term security of tenure | Property management software offers open banking solution | Property Redress Scheme sees 61% rise in complaints | Grainger offers five year tenancies to attract families | Build-to-rent on the rise as completions increase by 45% | Propertymark calls for ombudsman portal | More than 90% of new London towers to be residential | RIBA warns government to take Grenfell advice seriously
HR news
GDPR: Focus on key risk areas | ACAS publishes new guidance for agency workers
Social housing news
Leasehold Schemes for the Elderly: management fee limits | Updated guide to Right to Buy
Fire safety
Inadequate FRA leads to £40k fine | Dame Hackitt urged to introduce ‘duty holder’ role | EU: Fire safety must not be disregarded in quest for energy efficiency | Consultation on use of desk top studies | Insurance premiums to rise for leaseholders after Grenfell fire
Health and safety
New gas safety regulations now in force | New advice on manual handling training | Company fined after ladder fall | Housing association fined after exposing employees to HAVS
News from Scotland
More English landlords now operating in Scotland | Rent control proposed in Scotland | Help to Buy Extended | First phase of Edinburgh city centre regeneration to deliver new homes | £568m for affordable housing
News from Wales
Welsh Land Transaction Tax: not everyone’s a winner
Legislation
Leasehold reform: terms of reference published | Cap on managing agents fees for providing leasehold information | Are you ready for the new insurance CPD requirements?
Legal
Avon Ground Rents v Cowley
Topic of the month – Mind the gender pay gap
Events
This month’s seminars, conferences and CPD events
IRPM news
Invest in your property management team - you won't regret it, says IRPM CEO Andrew Bulmer
Here’s something that isn’t news. There is a shortage of skilled block managers. Here’s something that is news. My recent Twitter poll says 64% of property managers find evening residents meetings conflict with child care arrangements. Keep that in mind and consider this; while IRPM membership is roughly 50/50 male/female split, which is way ahead of the likes of some professional bodies for gender balance (RICS female membership doesn’t come close) the balance becomes increasingly male dominated at higher grades. Houston, we (still) have a problem.
My Twitter poll was hardly scientific, it was deliberately gender neutral and it looked at only one aspect of being a property manager, but it makes you think. And if you are an employer seeking the best team, I’d argue that taking time out to mull this over might be the best investment you make this year. Recruitment agencies tell me that good managers don’t leave the sector, they leave employers. And the cost and disruption involved in replacing a good manager, if you can find one, is immense. Better, cheaper and kinder surely, to invest in the team you have?
There is a conflict between delivering that great customer experience for our residents and providing a sustainable and rewarding work environment for our colleagues. If customers want evening meetings, that’s what you do. But other customer-focussed sectors manage this conflict. So it is well worth talking with your team and understanding what works for you both – right across their role. If they’re smart enough to manage complicated buildings in a complex legal environment while juggling customer and management needs, they’re probably smart enough to help you help them.
And therein lies a great team delivering happy customers that drive your bottom line. As my boss told me on day one of my career back in 1984, this is a people business. Still true to this day.
Pick up Andrew Bulmer’s themes (above) and more at your IRPM Annual Seminar on 23 May in London. There are some brilliant speakers; some funny, some serious, all useful and thought provoking. We’ll be talking what will happen after Grenfell, the new world of regulation and qualifications, violence in property management, that essential legal update and why chimpanzees (and customers and property managers) throw poo. Yes, really. Last few tickets on sale – book now.
Where is the customer in your business strategy?
There are people out there right now researching whether you can fly standing up. The next generation of airline seating would permit an ultra-high density in the aircraft cabin with the main feature being an upright passenger position. This would allow installation of the seat at a reduced pitch, while maintaining adequate comfort. The new seat design has fewer components, making it cheaper and easier to maintain. Only suitable for short flights, squeezing more passengers into the same space could bring the price of budget travel down even further. As ever, it will be the buying public who will make or break the concept and this is as true for property management as it is for ‘vertical travel’.
At IRPM, we put our customers at the heart of everything we do to raise professional standards and qualifications, which means we can be sure that the nine million households in England’s private rented and leasehold sectors will benefit from the continued professionalisation of managing agents.
Following a wide ranging consultation with the industry and our customers, the Government has announced plans that managing agents will be required to obtain a nationally recognised qualification to practice. This will be an industry game-changer and positions the IRPM firmly at the forefront of this shift in policy.
Within your team, department or business do all those who give advice, whatever their job title, to residents in the private rented and leasehold sectors have an industry recognised IRPM qualification enabling them to practice? If not, now is the time to get your team qualified and get 2018 off to a flying start.
Media reports
Experts refute ABI cladding claims
The Government’s independent fire safety panel has hit back at claims made by the Association of British Insurers (ABI) in April that cladding fire tests undertaken in the wake of Grenfell, fail to adequately replicate real world conditions.
According to Building magazine, in April the ABI described the full-scale tests used to demonstrate that cladding systems meet fire regulations as “utterly inadequate” and called for them to be revised. It commissioned a series of experiments by the Fire Protection Association (FPA) to show that the full-scale mock-ups used for the tests do not represent real world conditions, especially where combustible materials are involved. The ABI is also calling for all combustible materials used in external cladding systems to be banned. The insurers’ body said that if the insurance industry felt that not enough was being done to address its concerns, the availability and cost of insurance cover “could change”.
However, the Government’s independent expert panel insists that the current British Standard 8414 test is fully robust.
Residents consider class action over Grenfell-style cladding
Residents of privately-owned London buildings that have been fitted with Grenfell-style cladding are considering legal action against the developers, reported the BBC in April.
Leaseholders say they live in "constant anxiety" over their safety at New Capital Quay, Greenwich, London, since the disaster in which 71 people died. Fire wardens are on watch 24 hours a day after similar cladding was found. Cladding similar to that used on Grenfell tower was discovered on the luxury waterfront development soon after the fire last July. Developers Galliard Homes say the cladding was certified as compliant with building regulations at the time.
Home owners Nigel Pickford and Annabel Parsons are part of a group of up to six people obtaining legal advice on a class action case against Gilliard Homes and also potentially insurers NHBC in the event that they wrongly deny cover. The claims would likely be based on breach of contract under which reasonable care and proper materials should have been guaranteed and breach of building regulations, under which dwellings should be fit for habitation.
Resolution Foundation calls for long term security of tenure
A new report published in April by the Resolution Foundation argues that younger people who face the long term prospect of renting should be given a ‘German style’ long term security of tenure, as well as limiting rental hikes.
If home ownership rates follow the declining trend seen since 2000, a third of people in their twenties and thirties will still be renting homes by the time they reach retirement age. The report also cites that the number of households with children living in the private rented sector has tripled in recent years from 600,000 to 1.8 million. Download and read the full report here.
Property management software offers open banking solution
In future, customers of property management software firm Resident will no longer have to spend time inputting financial data in order to manage client accounts (source: Property Industry Eye). Instead, as a result of open banking, Resident will be able to automatically import bank feeds into its platform. The service is believed to be a first for a proptech, and will save customers, including property managers, owners, landlords and leaseholders, a significant amount of time.
Resident anticipates that the time saving on manual data entry across this number of bank accounts could be between one and two days per week.The new arrangement has been made possible via a partnership between Resident and financial firm TrueLayer.
Property Redress Scheme sees 61% rise in complaints
The Property Redress Scheme (PRS) has released its 2017 annual report, revealing that there has been a 61% rise in formal complaint notifications, compared to a 40% increase in 2016. Membership of the scheme has continued to grow at a rapid rate with a 38% year-on-year increase.
The report details an increase in types of complaints such as fees and charges, general communication, poor service and complaint handling, as well as rent collection as part of the wider increase in disputes received. The Property Redress Scheme Annual Report 2017 can be read here.
Grainger offers five year tenancies to attract families
Build-to-rent operator Grainger is pioneering five-year leases “in a bid to overhaul the poor reputation of the rental market and make it easier for families with children.” According to research from the English Housing Survey, reported by Letting Agent Today, more than 37% of private renters are now families, up from 29% ten years ago.
Grainger has 9,000 homes across cities including London, Birmingham and Manchester and the FTSE 250-listed company is investing £850m creating B2R schemes which it describes as similar to the garden communities available to renters in North America.
Build-to-rent on the rise as completions increase by 45%
The total number of build-to-rent homes completed, under construction and in planning across the UK is up by 30% on 2017 figures, according to the British Property Federation and Savills.
Analysis shows there are now 117,893 build-to-rent homes at all stages of the development pipeline in the UK, compared with 90,761 homes at the end of Q1 2017, with the number of completed homes increasing by 45%. The number of B2R homes under construction, has increased by 47%. London is leading the country with the highest volume of homes completed, under construction and in planning, followed by the north-west in second place.
Propertymark calls for ombudsman portal
ARLA Propertymark and NAEA Propertymark have submitted a joint response to the Government’s consultation on strengthening consumer redress in the housing market by calling for an ombudsman portal for housing related complaints, with one ombudsman for private housing and another for social housing.
Streamlining redress provision in housing through a one-ombudsman portal will bring clarity to consumers and ensure they know where to go to raise housing related complaints, said the organisations in April.
Redress works in different ways for private and social housing. By having one ombudsman for private housing and another for social housing this will ensure consistency across the housing sectors and improve speed of redress.
Based on knowledge, size of membership, experience and capacity, the two bodies believe that the ombudsman for private housing should be the Property Ombudsman (covering the private rented sector, block management,land and new homes, sales and letting agents) and the ombudsman for social housing should be the Housing Ombudsman and would cover social landlords, housing associations and providers of social homes.
More than 90% of new London towers to be residential
More than 500 tall buildings are in the pipeline to be built in London with a record 115 under construction. The fifth annual London tall buildings survey from New London Architecture reveals that a record 510 towers are in the pipeline, of which some 458 (more than 90%) are residential and have the potential to deliver 106,000 new homes. Working with property planning and advice specialists GL Hearn, the study provides the only comprehensive analysis of all tall buildings, over 20 storeys, which are proposed, in planning or under construction in London.
The report suggests that the growth of the B2R sector is boosting the number of higher buildings. Some 30% of the proposed schemes in 2017 were build-to-rent compared with none in 2013. However the number of applications for taller buildings is falling, down 10% from 2016 and down 35% compared with 2015 and the study says this could be due to a higher level of scrutiny from the Mayor and also the effect of Brexit and economic uncertainty.
RIBA warns government to take Grenfell advice seriously
According to Building magazine, the RIBA is concerned that the Hackitt Review is “at risk of missing critical recommendations”. The architects’ body wrote to then Housing Minister Sajid Javid in April raising serious concerns about the direction of the Hackitt Review into the Grenfell fire. It is worried that some of its key recommendations will be overlooked in the final report due out this month. It said: “The RIBA is concerned that the current approach of the Independent Review of Building Regulations and Fire Safety will not result in the lasting change needed to protect the public”.
HR news
With less than a month until the General Data Protection Regulations (GDPR) come into force, a recent report in People Management magazine advises organisations to focus on the key risk areas where enforcement action is more likely in the event of a breach.
This includes the issue of data security and taking steps to understand and address any areas of vulnerability in relation to the disclosure or transmission of staff data (particularly information employees would regard as sensitive, such as their bank account details or home address).The recent case involving the data security breach at supermarket Morrisons demonstrates how employers will remain liable for the actions of rogue employees.
It’s also wise to get prepared to respond to individuals exercising their new and enhanced rights under the GDPR. Key changes are the reduction in the period for responding to a data subject access request from 40 days to one month, and the need to provide the data subject with additional information when delivering the response.
Feefo has also produced a free guide to the GDPR in the form of an e-book which you can download from the IRPM Resource hub.
ACAS publishes new guidance for agency workers
One in four calls to the ACAS helpline from agency workers reveal they are not being paid correctly. ACAS' new agency workers guidance aims to promote an understanding of the rights and responsibilities of agency workers or those using the services of an employment agency.
The new ACAS guidance includes the following tips for agency workers:
- Agency workers are entitled to be paid even if the agency has not received a payment from the employer.
- Make sure you know your employment status as this is essential to understand your rights. Whether you are a worker, an employee or self-employed affects your pay, holidays and other entitlements.
- Remember that after a 12-week qualifying period, in most situations, an agency worker must receive the same pay as those directly employed.
You can see the ACAS guidance here.
The Government is currently running a consultation on the recommendations made about agency workers from Matthew Taylor's review of modern employment practices. The consultation closes on 9 May 2018. For more information
Social housing news
Leasehold Schemes for the Elderly: management fee limits
Fee limits or maximums, revised each year by MHCLG, apply to the management element of relevant service charges in Leasehold Schemes for the Elderly, Shared Ownership for the Elderly, and other types of grant-funded retirement leasehold accommodation, only where a clause appears in leases to specify that the limit should apply. They do not apply automatically where no such clause appears.
The limits from 1 April 2018 are:
• The basic limit will be £447.
• The limit when management is contracted out to an agent who charges VAT will be £513.
The government file can be found here.
On 3 April the English government updated its guide to RTB to reflect changes in discount which follow the CPI. The maximum discount you can get is £80,900, unless your home is in London where the maximum discount is £108,000. The maximum discounts will increase on 6 April each year if the Consumer Price Index increases. If the Index does not increase, the discounts will remain the same.
To download click here.
Fire safety
Inadequate FRA leads to £40k fine
A property manager has been prosecuted for having an inadequate fire risk assessment in place and ordered to pay £40,000 following the death of a woman at a fire at a block of flats on the Isle of Dogs, the London Fire Brigade reported in April.
Parc Properties Management Ltd (PPML), the managing agent for Meridian Place Management Ltd, were sentenced at Southwark Crown Court on Monday 19 March 2018, after pleading guilty to two offences under the Regulatory Reform (Fire Safety) Order (RRO) 2005.Vance Miller, who completed a fire risk assessment for PPML at Meridian Place in 2008, also pleaded guilty to one offence under the RRO.
Lee Drawbridge, Deputy Assistant Commissioner for Fire Safety, said: “Building owners have a responsibility to ensure regular fire risk assessments are undertaken which will help ensure that buildings have appropriate fire protective measures in place.
Dame Hackitt urged to introduce ‘duty holder’ role
The National Fire Chiefs Council (NFCC) has called for a duty holder with responsibility for fire safety to be introduced through the Independent Review of Building Regulations and Fire Safety headed up by Dame Judith Hackitt.
According to Inside Housing, the call from the fire chief membership body came in response to the prosecution of a property managing agent following the death of a woman in a tower block fire in August 2012 (see previous story). The proposed duty holder would have ultimate responsibility for fire safety in a building, in order to ensure that fire safety responsibilities are taken seriously.
Fire safety experts have reported significant confusion about who the responsible person required in law for fire safety is in privately-owned buildings where there may be a freeholder and owner(s) as well as a property management company.
Editor’s Comment: Managing agents are expected to know quite a lot about fire safety; perhaps fire service personnel could be expected to do the same about basic leasehold management roles. If there is shared responsibility then why not prosecute all parties? In the case referred to in this article the death occurred to tenant of a rented leasehold flat with smoke alarms poorly maintained by the tenant’s landlord; how can a leasehold property manager be responsible for what happens to smoke alarms inside a flat in such circumstances. You cannot have one dutyholder in all circumstances.
EU: Fire safety must not be disregarded in quest for energy efficiency
The EU’s decision to urge member states to consider fire safety in new buildings and those being renovated sends a strong signal that energy efficiency must not come at the cost of fire safety. The revised Energy Performance of Buildings Directive (EPBD), which was adopted by the European Parliament on April 17, contains two articles addressing fire safety. The changes to the directive come after increased concerns regarding fire safety led the European Parliament Committees for Industry, Research and Energy (ITRE) and Environment, Public Health and Food Safety (ENVI) to include fire safety in the text.
The EU Parliament report says that member states should encourage high-efficiency alternative systems for new buildings and those undergoing major renovations, while also addressing the issues of healthy indoor climate conditions, fire safety and risks related to intense seismic activity. The London Grenfell Tower fire last June is thought to have influenced the fire safety additions to the revision of the EPBD.
Consultation on use of desk top studies
Assessment of the suitability of materials in lieu of tests, also known as desktop studies, are an established part of the system for classifying the fire performance of construction products and systems set out in Annex A of Approved Document B.
On 11 April the English government issued a consultation paper seeking views on the future use of these studies, following the interim report of the Hackitt review of Building Regulations. Any changes would apply to England only. The consultation is seeking views on whether ‘desktop studies’ are appropriate for all construction products, wall systems (cladding) or for any other purpose. If desktop studies are deemed appropriate, the proposed changes include improving the transparency of assessments, enabling proper scrutiny of results and ensuring that the studies can only be carried out by properly accredited bodies that have the relevant expertise.
The consultation closes on 25 May 25 and can be downloaded here.
Insurance premiums to rise for leaseholders after Grenfell fire
The London Borough of Kensington and Chelsea has announced that its insurance premiums for leaseholders will rise dramatically after the losses incurred arising from the fire. The amount for each leaseholder will depend on how many rooms the property has. A leaseholder in a two-bed property will face a £576.75 bill, while a four-bed property leaseholder will pay £697.69. The Council has decided to refer the increases to the FTT to determine whether they are reasonable.
Health & safety
New gas safety regulations now in force
New rules making gas safety records easier to obtain became law in England and Wales on 6 April 2018. The Gas Safety (Installation and Use) (Amendment) Regulations 2018 include changes to when annual gas safety checks are carried out.
Instead of having a safety record running between specific annual dates, the new ‘MOT style’ check allows landlords to carry out the work up to two months before the due date while still keeping the same annual check date.The renewal date is known as the “deadline date” in the amended regulations.
In addition to this change, where an appliance has been replaced or added in a property, the gas safety record for that appliance may be done up to 2 months after the deadline date but this discretion may be exercised:
• only once in relation to each appliance or flue; and
• only in order to align the deadline date in relation to the next safety check of that appliance or flue
Another small change is that the last two records must be retained by the landlord as a minimum. Under the previous rules, a record had to be retained for at least two years. Landlords must still carry out safety checks every 12 months and carrying on with scheduled checks will be compliant with the changes.
More guidance on gas systems and inspections can be found on the HSE website.
New advice on manual handling training
Off-the-shelf manual handling training should become a thing of the past, according to new advice released by the Health and Safety Executive (HSE). New musculoskeletal disorder (MSD) advice has been issued by HSE to help employers to decide what type of help they need to tackle the MSD risks in their workplace. The web-based advice illustrates different approaches with examples and identifies who may be able to help address their needs. The web based advice has been developed with the input and involvement of businesses, trade unions, trade bodies, training providers, professional bodies and safety professionals and consultants.
Company fined after ladder fall
Sheffield Magistrates’ Court heard how, on 1 March 2017, a window installer working for H.P.A.S. Limited, trading as Safestyle UK, was attempting to install a first-floor rear bedroom window at a property on Cemetery Road, Doncaster, when the ladder he was climbing slipped. The ladder was not footed or tied and the operative fell from a height of over three metres, sustaining a broken knee cap which required surgery.
An investigation by the Health and Safety Executive (HSE) found the company’s system for planning work at height was inadequate in that it failed to ensure that work was carried out in a safe manner. Windows were found to be not routinely installed from the inside and ladders were used in a way that constituted serious risk. Additionally, there was no system of monitoring or supervision in place and operatives were left to their own devices.
H.P.A.S. Limited trading as Safestyle UK, of Style House, Eldon Place, Bradford, pleaded guilty to breaching Regulation 4(1) of The Work at Height Regulations 2005 and was fined £850,000 with £1,083 in costs.
Housing association fined after exposing employees to HAVS
A community housing association was sentenced at the end of March after it failed to effectively manage its employees’ exposure to Hand Arm Vibration Syndrome (HAVS) over a prolonged period of time. Newport Magistrates’ Court heard how, between July 2010 and May 2015, employees of Tai Calon Community Housing Limited were routinely exposed to vibration in their day to day work. Following the company’s introduction of health surveillance in May 2015, a number of employees were diagnosed with HAVS which has side effects such as pain and loss of strength in the hands and has been known to cause distress and sleep disturbance.
An investigation by the Health and Safety Executive (HSE) found Tai Calon failed to adequately assess the risk to employees from the use of vibratory tools, failed to implement adequate measures to reduce employees’ exposure to vibration, failed to place employees under suitable health surveillance and failed to provide employees with suitable information, instruction, and training.
Tai Calon Community Housing was found guilty of breaching Section 2(1) of the Health and Safety at Work, etc Act 1974 and was fined £30,000 and ordered to pay £2789.25 in costs.
News from Scotland
More English landlords now operating in Scotland
The number of English landlords renting out properties in Scotland has quadrupled since 2012, thanks to cheaper property prices north of the border, along with tax reliefs and higher yields, according to recent research (source: Landlord Today).
SafeDeposits Scotland reveals that there has been a 430% increase in the number of English landlords using the system since 2012. In 2017, the number was 1,388 new registrations and data for 2018 shows the trend continuing with deposits from English landlords up 226% on the same period in 2017.
Rent control proposed in Scotland
Labour has once again called for rents to be capped in Scotland after fresh data revealed rent increases were outstripping wage rises over the past five years (source: Landlord Today). Scottish Labour leader Richard Leonard has made no secret of his desire to control rents and limit the power of private landlords north of the border, despite concerns that it could have a negative impact on tenants.
In his keynote speech to Scottish Labour’s spring conference in March, he detailed his vision to reshape the rental sector in Scotland, including the introduction of a new “Mary Barbour law” to protect tenants. The proposed ‘Mary Barbour law’ is named after the Clydeside political activist who played a leading role in the rent strikes of 1915.
On 4 April it was announced that the Help to Buy (Scotland) scheme will be extended beyond 2019. From April 2019, a further £100 million will be invested over two years, with the intention of helping up to 4,000 households to purchase a new home.
Edinburgh city centre regeneration to deliver new homes
A key part of a large-scale regeneration project in central Edinburgh has been submitted for planning, with over 200 homes designed specifically for rent being considered by City of Edinburgh Council.
Moda, a developer and operator of private rented housing, has submitted plans for 221 rental homes as part of the Springside regeneration in Fountainbridge, Edinburgh. Combined with an earlier consent, this first phase will deliver more than 350 homes in total.
Moda, with JV partner Apache Capital, acquired Springside from Grosvenor GB&I in May last year. Once complete, the entire project will provide over 500 homes as well as 25,000 sq. ft. of commercial space.
£568m for affordable housing in Scotland
A £35 million increase to council allocations, announced in April means more affordable homes will be delivered across Scotland bringing the total budget to £568 million. The increases will continue over the coming years, rising to £591 million in 2019-20 and £630 million in 2020-21, bringing the overall funding allocated to councils for affordable housing to £1.79 billion over three years.
News from Wales
Welsh Land Transaction Tax: not everyone’s a winner
New property taxes in Wales will save average home buyers £560 compared with the old system, suggests new research reported in Landlord Today. In April, Wales introduced a Land Transaction Tax (LTT) to replace UK Stamp Duty and the charges start once prices are above £180,000 - higher than the current £150,001 threshold.
Analysis by removals website Compare My Move found that with the current average house price in Wales at £153,034, the average homebuyer would have paid £560 in Stamp Duty before the change but nothing under LTT.
The research shows that under the changes, most buyers in Wales will save money on their purchases, even for areas with the most expensive average prices.
However, the changes also mean that buyers purchasing a house worth more than £402,000 will be worse off as a result of the changes because it is from this point that the costs intersect with the old system and LTT becomes more expensive than Stamp Duty.
Legislation
Leasehold reform: terms of reference published
The Law Commission has published its terms of reference for the residential leasehold law reform project announced in the Law Commission's Thirteenth Programme of Law Reform and in the government's response to its consultation Tackling unfair practices in the leasehold market.
The project will be a wide-ranging review of residential leasehold law, focussing in the first instance on reform to:
- enfranchisement; and
- commonhold.
The Commission and Government are discussing other areas of residential leasehold reform that could be included in the project. Full terms of reference can be downloaded here.
Cap on managing agents fees for providing leasehold information
One of the questions posed in the government’s recent call for evidence was whether sellers of leasehold homes should be encouraged to engage with their freeholder before marketing their home for sale, writes PM Legal’s Cassandra Zanelli in a recent blog.
The government is keen to encourage sellers to be “sale ready”, and gather together information early that will be needed later on in the sales process. And while there won’t be a “management pack” mandated for leasehold properties, the Government intends to use it’s “how to sell” guide to encourage sellers to do this.
It’s also indicated that Government is keen to streamline the process of gathering information by working with the industry to standardise leasehold information forms.
A further question posed in the previous call for evidence was whether there should be a requirement for managing agents/freeholders to respond to enquiries within a fixed time period. Of the 668 respondents to this question, 94% agreed that managing agents and freeholders should be required to respond within a fixed time period.
Given the overwhelmingly positive response to the question, Government is therefore committed to setting a fixed time period for managing agents and freeholders to respond to leasehold enquiries. Further work will be done on the mechanism for this, which may include legislation.
The issue of fees for leasehold information is a thorny one.
The call for evidence asked whether maximum fees should be set for the services and information provided by managing agents.
The majority of respondents to this question were in favour of maximum fees being set for the services and information provided by managing agents.
Accordingly, the Government is “keen to introduce” a cap on the fees for the services and information provided by managing agents. They’ll investigate the best way that this can be done, which may include appropriate legislation.
Editor’s Comment: ARMA, the Law Society and the Society of Conveyancers have all worked on issuing good model enquiry forms with some limited success. However, it is not the managing agent who decides what information is requested, it is the solicitor acting for the purchaser. The Law Society has no power to direct a solicitor to use a model form; regional law societies also have their own forms which they recommend to members. How do you set a maximum fee when you are never sure what is to be asked and is there a maximum fee charged by solicitors for conveyancing?
Are you ready for the new insurance CPD requirements?
On 1 October the new Insurance Distribution Directive (IDD) comes into force and brings with it a requirement for training that will impact the majority of property managers.
Under the IDD rules any firm distributing insurance will need to ensure a minimum level of ability by those members of staff employed in this aspect of their business. This will include property managers if they are involved in insurance.
The IDD defines this level of competence to include:
• knowledge of the terms and conditions of policies offered,
• applicable laws governing the distribution of insurance,
• claims handling,
• complaints handling,
• assessing customer needs,
• the insurance market,
• business ethics standards and
• financial competence.
All employees involved in distributing insurance need to demonstrate a minimum of 15 hours of CPD in insurance each 12-month period.
Paul Robertson, MD of 1st Sure flats is offering a helpful solution with the launch of his book Robertson’s Insurance Principles for Leasehold Flats. Paul describes it as the essential guide for property managers or anyone involved in arranging insurance for a leasehold block. As well as offering a comprehensive insight into the subject it also comes with an online testing facility enabling readers to demonstrate their first year’s CPD requirements. More details are available where the book and online testing can be purchased.
Legal
Mark Loveday reports on a recent case which provides guidance on the reasonableness - or otherwise - of interim service charges
Service charges levied in respect of residential property management typically involve two elements. These are:
• An interim or advance service charge based on the estimated landlord’s “relevant costs” which will be incurred in the forthcoming service charge year.
• A balancing charge to cover any shortfall between the interim charges and the actual relevant costs incurred during the year. This is obviously calculated after the service charge accounts are drawn up at year end.
These charges must of course be assessed and demanded in accordance with the lease.
It is well known that section 19 of the Landlord and Tenant Act 1985 imposes a “reasonableness” test on both kinds of charge. But the legal test for each is different. Interim service charges are covered by s.19 (2), which says a managing agent cannot charge leaseholders a “greater amount than is reasonable” by way of interim service charges.
The recent decision in Avon Ground Rents v Cowley [2018] UKUT 0092 (LC) is a rare case which gives guidance about interim service charge budgets. In Cowley, it was said that managing agents and landlords must take into account the following:
a) It must be reasonable to incur costs on a particular service.
b) Other considerations are “the time at which the landlord would, or would be likely, to become liable for the costs, how certain the amount of those costs was, and whether there was certainty that the works would in fact be carried out and paid for during the period covered by the advance payment”.
c) The financial position of either the landlord or the tenant would not normally be a relevant consideration. Nor would the fact that the tenants have had to pay high service charges in the previous year normally constitute a relevant consideration.
d) Matters not known when the budget is set will not usually be taken into account in determining the reasonable service charge to be paid in advance.
Principles (a)–(c) are derived from the case of Parker v Parham (2003) EW Lands LRX/35/2002, and (d) is derived from Knapper v Francis [2017] UKUT 3 (LC).
In Cowley, the landlord’s agents demanded interim service charges from the leaseholders which included a contribution of nearly £300,000 toward major works. The works were largely to remedy defects relating to the construction of the development. At the time the agents prepared the budget it was hoped that all or part of this would be paid under the NHBC warranty. Indeed, a claim had been made and the NHBC has accepted the claim “in principle”. The agents nevertheless wanted the money up front, in case the NHBC warranty claim failed or was delayed. In fact, the NHBC eventually offered £296,046 compensation for the defective works.On appeal, the landlord argued it was wrong in principle to assume that liability would be reduced by third party receipts when these were not yet certain.
However, the Upper Tribunal did not agree. The fact that a landlord’s expenditure is covered by a warranty or insurance policy did not mean that it could never include that expenditure as part of an advance payment. On the other hand, there is no reason why the prospect of a receipt from a third party must be certain before it may be taken into consideration in determining the reasonableness of an interim service charge. In this case, the NHBC had already accepted the claim “in principle”, although there was some dispute about the precise amount and the date of payment. But it was still not reasonable under s.19 (2) for the managing agent to claim the full amount from the leaseholders as well.
Managing agents and landlords must of course follow the detailed guidance for service charge budgeting set out in the RICS Residential Service Charge Management Code (3rd Edition). But the lesson from Cowley is that they must also ensure the interim service charges are “reasonable” under s.19 (2) Landlord and Tenant Act 1985. That includes taking into account any anticipated receipts - such as moneys which may be paid under warranties or insurance during the forthcoming service charge year.
Mark Loveday is a leading Barrister with Tanfield Chambers specialising in leasehold management and enfranchisement work
Topic of the month
Mind the gender pay gap
From 4 April 2018, all companies with more than 250 employees are required by law to report annually on their gender pay gaps, detailing the difference in average pay between all men and women in a workforce. According to People Management magazine, “More than 10,000 businesses with 250 or more employees had filed their gender pay gaps – the average difference between what they pay male and female employees – by the time the official deadline passed…”
Overall, 78 % of the 10,037 organisations reported that they paid men more than women on average. The average median hourly pay gap across all employers was 18.4% among full and part-time workers, and 9.1% among full-time workers alone. The figures are calculated by companies for the Government Equalities Office using a specific annual reference or ‘snapshot date’ of 4 April for private organisations and 31 March for the public sector. Analysts found that only 14% of companies paid women more on average, while 8% reported having no pay gap between the sexes. The Equality and Human Rights Commission (EHRC) has said it will use sanctions against companies that fail to report their gender pay data and may issue ‘unlimited’ fines.
For firms that may hit the 250+ threshold in future, ACAS has produced a helpful guide on how to report.
Key points are:
• An employer must comply with the regulations for any year where they have a 'headcount' of 250 or more employees on 5 April (where the private and voluntary sector regulations apply) and 31 March (where the public sector regulations apply), but employers of all sizes should consider the advantages.
• A wider definition of who counts as an employee is used here (from the Equality Act 2010). This means that workers are included, as well as some self-employed people. Agency workers are included, but counted by the agency providing them.
• There are six calculations to carry out, and the results must be published on the employer's website and a government website within 12 months. Where applicable, they must be confirmed by an appropriate person, such as a chief executive.
• Gender pay reporting is a different requirement to carrying out an equal pay audit.
• Employers have the option to provide a narrative with their calculations. This should generally explain the reasons for the results and give details about actions that are being taken to reduce or eliminate the gender pay gap.
• While the regulations for the public, private and voluntary sectors are near identical, and the calculations are directly comparable, the public sector regulations also take into account the public sector equality duty.
Where firms opt to provide a narrative, ACAS recommends that firms include:
• why the results show challenges. For example, an employer might explain that their executives get the highest bonuses and most of them are men. In this situation, employers should consider taking new or faster actions to reduce or eliminate their gender pay gaps.
• why the results show successes. For example, an employer might explain that a recent change to their bonus policy has helped provide a much lower bonus gender pay gap.
• plans for long-term results. For example, an employer might want to tackle the underrepresentation of women in their science and engineering roles by running a recruitment campaign for junior roles that particularly encourages women to apply. In the short-term this means more women will be at the starting salaries, which could make the gender pay gap look higher. However, in the longer-term this will balance out and the underrepresentation should be reduced.
By publishing these details on company websites, firms could also use this opportunity to promote the steps they are taking to improve gender equality and reduce or eliminate their gender pay gap to staff, clients and potential new recruits.
In the property management sector, most firms employ fewer than 250 people but there are some notable exceptions. FirstPort Property Services, Mainstay and Rendall & Rittner have all published their gender pay gaps online at here.
At Firstport, 35% of employees in the top pay quartile are women. The mean hourly rate for women employed by the firm is 7.6% higher than that of their male colleagues and there is no gender pay gap between men and women for median hourly rates. However only 1.2% of women receive a bonus compared to 5.9% of men. Women working at Rendall & Rittner fare even better, representing 41% of the top pay quartile and earning 4% and 3.6% more than their male counterparts for mean and median hourly rates respectively. At Mainstay the story is a little less rosy with the mean hourly rate 11% lower and the median rate 6.3% lower for women than men.
Women working in social housing fare less well than those employed by private firms, despite generally making up a larger proportion of the workforce. Inside Housing reports that six of the top 20 social landlords revealed mean gender pay gaps for 2016/17 above the average of 17.4%. A2 Dominion has the highest mean gap of 26%, followed by Metropolitan Housing Trust (23.3%) and Stonewater (23%). The other three associations to record higher-than-average gaps were Orbit Group (19.5%), Sanctuary Housing Association (17.8%) and Your Housing Group (17.7%).
The smallest mean gender pay gaps were recorded by Clarion Housing Group (5%), Sovereign Housing Association (5.2%), The Guinness Partnership and Together Housing Group (both 6.4%).
There is clearly some work to be done if the gender pay gap is to be eradicated but the government hopes that getting the figures out into the public domain is a positive step towards effecting change.
Despite being placed fourth in the rankings of all 28 EU member states, UK statistics for gender equality at work have barely budged in 10 years. So even if your firm doesn’t have to report its figures, working out the gender pay gap could be a useful internal exercise enabling you to identify areas for improvement. It may even be helpful as part of the recruitment process.
For more on pay reporting and how it could impact on your company, go to the CIPD website.
Events
IRPM Diary dates
23 May 2018 – Annual Seminar – London
09 July 2018 – Member exam - Glasgow
15 August 2018 - Associate Exam Workshop - London
16 August 2018 - Associate Exam Workshop - London
11 September 2018 - Associate Exam in London & Birmingham
26 September 2018 - AGM
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.
Introduction to Residential Property Management
London – 06/06/18, 27/06/18, 1/08/18
Reading Leases
London - 11/07/18
Residential Service Charge Accounts Guidance
Manchester - 25/05/18, London - 26/06/18
The procedural and technical issues of Section 20
London – 20/06/18
GDPR Workshop (morning or afternoon)
London 10/05/18
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
CIH South West Regional Conference & Exhibition
Mercure Bristol Grand Hotel – 16-17/05/18
CIH Repairs & Maintenance Conference 2018
Ricoh Arena, Coventry - 23 -24/05/18
The Big Conversation: for up and coming housing professionals
Horizon, Leeds – 23/05/18
CIH Housing 2018
Manchester - 26-28/06/18
Introduction to Leasehold management
London 11/10/18
Coventry 3/7/18
RTB & RTA
London 16/11/18
Coventry
3/7/18
For more information on their events visit their website.
National Leasehold Group
For their seminar listings
RICS (open to non-RICS members)
For all RICS courses
