Technical Update - November 2019 - TPI Update

The month in brief

Welcome to the November issue of the Technical Update. Our regional seminars are over for another year and our thoughts are turning towards Christmas – and that December election. As this issue goes to press, we are still reacting to the fallout from the Bolton Cube fire (scroll down to Andrew Bulmer's column for more on this) and to the first reports from the Grenfell Inquiry. There is much to digest for our industry and for IRPM members and we will keep you updated as more findings are reported.

In this issue we also take a closer look at new government initiatives around PropTech – and launch one of our own. We report on the latest issues around flammable cladding for both private leaseholders and those living in social housing and we round up the latest take-aways from the Grenfell Tower Inquiry.

This month’s Talking points focus on leasehold reform and gas versus electricity – which is cleaner? And our Topic of the Month this time round is bats. If you have bats roosting in the roof of a block you manage, what can you do about it. The short answer is nothing – but scroll down to find out more.

As always, you can contact us with your news, views or queries by emailing the Editor at lesley@ davisaylingmedia.co.uk

IRPM News
CEO’s Column | Regional seminars sold out! | Tech Insights Programme – IRPM leads the digital agenda

In the News
Dame Judith Hackitt to advise on new Building Safety Regulator | PropTech experts to take innovation forward | Labour pledges £60bn for greener and zero-carbon homes

Leasehold/block management
Agent sells first London apartments without ground rents | Leaseholders set to benefit from faster broadband | Is cladding guidance making flats unsellable? | EV charge points: commonhold is not the answer, says leading provider

PRS and B2R
Manchester tops latest B2R ratings | Tallest modular residential building goes up in Croydon | Build to Rent sector goes from strength to strength

Social Housing
HAs may not cover fire safety costs, says G15 chair | English social housing at risk says Regulator | PRS toolkit for local authorities

Scotland and Wales
Scottish property factor launches climate emergency response | Scotland’s social housing to be more energy efficient | Scotland completes multi-million pound infrastructure projects | Welsh government considers ‘due regard’

Fire safety
Grenfell Tower Inquiry Phase 1 now completed | Questions over materials central to Grenfell Inquiry phase two | Grenfell judge: evacuation plans should be developed for all high-rise buildings | Government looks again at ‘stay put’

Health & safety
HSE releases work-related statistics

Legislation
Consultation launched into tighter home energy efficiency | Don’t ignore new septic tank regulations | ALEP: review the ‘two year rule’ to simplify enfranchisement

Legal update
Mark Loveday looks at this month’s key cases

Talking points
Is leasehold reform a “real vote winner” | Gas v electricity: what’s the cleanest form of energy?

Topic of the month
Bats in the belfry? Don’t panic – plan ahead

Defects database
Timber decay – dealing with wet and dry rot in your block

IRPM events
What is happening, when and where?

IRPM News

Passing the blame parcel – building managers could get caught out

Andrew Bulmer examines the implications for lRPM members of Type 4 FRAs and last Friday's fire in Bolton

Leading HAs, student accommodation and build-to-rent operators are carrying out invasive Type 4 (whole building including inside the apartments) fire risk inspections of their taller and riskier buildings. The private leasehold sector is not Type 4-ing to the same extent. Why not?

Is it necessary? There are numerous fires in flats every week and most buildings behave as they should, with the fire contained within the flat concerned. Some in industry warn that checking every building would create chaos. They argue (and they have a good point) that even if you got consent and funding to carry out the inspections, what happens when buildings are found wanting, as plenty surely will be?

Residents will be fearful, sales will fall through, the housing market could suffer, people’s lives will be affected. Trying to get funds to pay for works in fractionally-owned buildings (leasehold or commonhold) can be incredibly difficult. Then, what capacity is there in the construction industry to get the remediation works done? Finally, agents were never set up to remediate big buildings en masse and could drown under the workload. It could end up in a literally fearful mess.

On the other hand, far too many buildings are failing their Type 4s. We have a 20-year (at least) legacy of badly built buildings that have the potential to put lives at risk and property managers in the dock. Post-Grenfell, the Barking balcony BBQ, the Worcester Park inferno and now the Bolton Cube student block, it is clear that confidence in residential buildings cannot be assured anymore without Type 4 information to hand.

Property managers didn’t build these things, but if we do not act to make them safe, we could be in the firing line come the next disaster. And there will be another disaster. If the student block fire had happened at 4.00am instead of early evening, it would have been a very different story.

Lives matter more than money, argues Dame Judith Hackitt, who is very clear indeed that building managers should not wait for new legislation to come into force. Dame Judith confirms “only the knowledge of having a problem… …provides the opportunity to mitigate risk whilst also looking for longer term remedial solutions,” i.e. don’t turn a blind eye. Get on with it today. Look at your buildings and find the problems, and then do what you can to reduce risk now.

This is easier said than done; you may not be able to get either consent or funds for investigations and surveys. While some are shouldering their responsibility, we are hearing of developers who are not cooperating with managing agents; of landlords who are passing the problem back to the managing agent; and of leaseholders in RMCs refusing to pay for and carry out inspections. Sure, a freeholder or an RMC might not have built the building, nor have an income remotely sufficient to fix it, but passing the buck to the agent is not acceptable.

At the very least, an agent can communicate clearly the risks (we cannot guarantee safety until we know it is built right) and next steps (it needs checking) to their client. If they do not want to instruct/pay for investigation work, put them on notice of your advice, so that it is clear you are following their instructions. Consider what will happen if the worst happens and the blame game starts; you don’t want to be holding that parcel when the music stops. You will need to show you thought about the issue, gave best advice and did what you could.

And one thing is very clear. Government needs to step in with money. There is hardly a party in the entire landscape that can’t blame someone else. Landlords blaming builders, builders blaming supervisors/suppliers/building control/building regulations/product certification, ad nauseum. That will be a bloody battleground to come. What is certain is that it wasn’t the leaseholders’ or the managing agents’ fault. If the leaseholders have to pay to get the building fixed, then Government will have to step in for those who cannot pay their share. And the sum involved will make the Brokenshire £200m ACM fund look like a drop in the ocean.

Warranties are ticking. Scrutinise your portfolio for buildings still in warranty and get those checked quickly, before the warranty expires. Once it is gone, finding someone to pay for the work will be a lot tougher.

Bolton student block, the Cube, burned ferociously this weekend. Under 18m tall, the building appears to have been clad in HPL, now banned for new builds over 18m but potentially okay to leave on existing buildings, subject to installation. The fire spread quickly and burned out the upper floor right back to the frame.

In June 2017 following Grenfell, Angela McKinney, operations manager for student accommodation owner DIGS, said that the building had staff on site 24/7 and that residents would be evacuated if there was a fire. She confirmed that safety inspectors were "happy" with what they had seen at the Cube, and added: "When any further legislation or reviews are published we will be reviewing our procedures accordingly."

The evacuation procedure almost worked, sort of. Nobody died, though two were injured. But it’s not okay.

One student had to be rescued by fire crews using an aerial platform fortunately able to reach this relatively short building.
Students did not evacuate immediately because too many false alarms had ‘trained’ them not to bother. This points to poor design/installation, poor maintenance and/or poor management.
The fire started in the early evening; if it had happened a few hours later when 220 residents were sleeping off a happy student start to the weekend…

The final verdict and lessons must wait for the evidence to come, but we do know the fire spread more quickly than expected for HPL cladding. Why so fast? Perhaps the insulation, perhaps the fire-stopping, perhaps poor installation? Whatever, the media pictures show the structure burned back to the frame and that almost certainly means the compartmentation failed. A Type 4 inspection would have revealed that.

Which brings us to that mortgage valuation cladding form… Sales are still falling through at an alarming rate, with mortgage valuers "nil-valuing” flats in buildings with cladding unless certified in accordance with Advice Note 14. Government is aware this note has been widely criticised for requiring all buildings with cladding systems to have the cladding certified to BS8414.

A new draft of the EWS1 form is being worked up by a cross-industry party led by RICS, to be provided by building managers to mortgage valuers. It is still being finessed but it is intended to take the brake off sales for buildings that have non-combustible cladding.

Challenges remain in getting fire risk assessors to sign the form since, to properly establish the cladding system, it may still need to be inspected to confirm the insulation system for example, and also to check it has been installed correctly. While it should do some good, it won’t cure buildings with the wrong materials or poor construction. Not the total panacea some are hoping for. IRPM will update further on this when it is released.

Andrew Bulmer is CEO of the IRPM

Regional seminars sold out!

This year’s IRPM Regional Seminars, like the Annual Seminar in May, were a sell-out. Events took a packed programme to five locations around the country in September and October, starting in Bristol and finishing in London. It was great to meet so many members on their home patch and a big thank you is due to our sponsors who made the whole thing possible.

The seminars all followed the same format. A range of presentations, some technical some not, were followed by an interactive workshop session and each day was punctuated by lunch and networking sessions.

First up was CEO Andrew Bulmer who updated members on the latest developments at the IRPM and outlined the huge changes that are taking place in our industry. He touched on the implications of the Hackitt review; rebooting commonhold; the emergence of a Building Safety Regulator; and regulation of property agents with all that entails around qualifications and registered firms.

A total of five specialists from the Brethertons leasehold team plus Cassandra Zanelli from PM Legal took turns to deliver the by-now traditional legal update (part 1). The experts from Brethertons rounded up key leasehold cases since the IRPM Annual Seminar in June.

Gary Hendry and Shaun Lundy from 4Site Consulting then held everyone’s attention by talking the audience through the implications of the Hackitt Review. Implementation will have a far-reaching impact on our sector and on the day-to-day working lives of property managers, their clients and customers. 4Site outlined the importance of the new safety case that property managers will have to provide for each of their blocks and explained the concept of the ‘golden thread’ of building information that will be a future requirement.

After lunch, the lawyers were back for the second instalment of their legal update. Then Zoe Southwell from Block Recruit gave members such a fascinating and passionate insight into wellbeing at work and staff retention, that some delegates described it as "inspirational" in their feedback.

The rest of the day was taken up with two problem-solving workshop sessions that looked in detail at a range of ‘thorny problems’ that really tested the skills and judgement of the property managers in the room. Conclusions drawn from the workshops were that every property management situation is different. There is no one-size-fits-all for block management: it all comes down to professionalism and picking your way through the IRPM’s Four Elements of Professionalism:

• Technical competence

• Safety

• Customer and consumer care

• Ethics and behaviours

Key takeaways from the workshop were that the safety of residents is paramount and communication is key. Just five years ago, leaseholders were not the focus of our business. Today this is very much the direction of travel, with the consumer at the heart of what we do. So it is vital to engage with leaseholders and actively manage expectations.

CEO Andrew Bulmer sets out some of the key take-aways from the five workshop sessions:

IRPM professionals are not happy managing unsafe buildings. Sounds obvious, but there are critics who say property managers put money before safety. Judging by the effort our delegates put into navigating our scenarios, I would declare the naysayers wrong. Our managers want safe buildings as much as anyone.
Too many tall buildings, when inspected thoroughly, are not built correctly. There was plenty of delegate scepticism over the accuracy of “as-built plans”. Failures of fire compartmentation internally and externally are widespread. The construction sector, over at least the last 20 years, has cut corners. When Hyde HA Type 4’d their 86 tall blocks, every one of them failed in some way. Their experience, it is becoming clear, is indicative.
Given the findings above, managers are becoming distrustful of construction standards and are increasingly minded to go beyond the basic fire risk assessment and carry out a more invasive investigation, to check the necessary compartmentation is in place. Many HAs, student accommodation and build-to-rent operators are now doing Type 4 invasive fire risk assessments as a matter of routine.
When buildings are suspect or found to be unsafe, some developers, freeholders, HAs and RMCs are working with the building managers to investigate and to remedy the situation. However, some developers, landlords and even RMC directors are not. Without access, consent and funds, managers can be left unable to act. Some firms are quitting those instructions, others are hanging on in the hope the situation will change.
We need legislation transferring the ownership of the flat front doors to the landlord.
Sales of flats are falling through where lenders are declining applications due to cladding. The new draft EWS1 form to help reduce failed sales, for building managers to get signed by a competent person, might help, if the fire risk specialist can get the professional indemnity insurance to sign it. Their premiums, policy excesses and exclusions are going through the roof. Also, where a manager cannot confirm cladding satisfies BS8414, managers are getting threats of claims from frustrated sellers where sales have fallen through.
Communication with residents, who could be scared and angry, is key. The more reassuring and listening a manager can be, the better. Inevitably there were varied experiences of communicating with our customers, but ultimately, the delegates saw this as essential.
Focus especially on buildings that have some warranty period left. They have a better chance of recovering remediation costs than buildings out of warranty, where you are left chasing down the supply chain for latent defects, etc.
Be prepared to manage the media. They are increasingly interested in this issue, in spite of being distracted by Brexit, elections and Trump.
If your client does not agree to your advice to carry out more in-depth investigations, make sure you have advised them in writing what you think is needed and why. If something goes wrong, at least you can demonstrate you have advised and been blocked from acting.
The stay put policy needs a review. In the meantime, human nature may mean it gets ignored anyway in the event of a fire. Your fire risk strategy needs to allow for that as best it can.
When the builder is gone, the warranty has expired, other avenues are closed and it really is down to every leaseholder to pay their share of the cost of remediation, that is a very difficult situation indeed. Simply, not everyone will be able to pay, even where they might be willing. Thoughtful and frequent communications with the residents will be essential. This is when the “customer service culture” is really tested. Also, Government help will be required.

And finally, the London event was gate-crashed, in the best possible way, by Jonathon Bramhall, policy lead for the Resident's Voice part of the Building Safety Programme; Dame Judith Hackitt's recommendations being made real through the MHCLG.

Tech Insights Programme – IRPM leads the digital agenda

At IRPM, we recognise that technology has an ever-increasing influence on the world that we live and work in. As part of our commitment to raising the standards of property management in the UK, we will be running a new IRPM Tech Insights Programme to bring the sector together and explore some of the key challenges that we face and the role of technology in solving them.

While there is a lot of noise around technology at the moment, this new programme which will initially take the form of a series of roundtable events, will focus on the real challenges that we all face around safety, customers, ethics and skills. We will look at what technology is available, what are the opportunities, what are the risks and what do we need to do next? Watch this space for updates as we report on our findings.

We would really like to know how you feel about Technology in the industry. Please help us by completing this short and easy survey.

Create your own user feedback survey

In the news

Dame Judith Hackitt to advise on new Building Safety Regulator

The government has announced that, following on from her role as chair of the government’s recent review of building regulations and fire safety, Dame Judith Hackitt will continue to advise on how best to establish the new Building Safety Regulator.

The Regulator will oversee the design and management of buildings, with a strong focus on ensuring the new regime for higher-risk developments is enforced effectively and robustly. It will also have the power to apply criminal sanctions to building owners who flout the new rules.

The government published the consultation on its reforms, Building a Safer Future, in June 2019 and is currently analysing the responses.

PropTech experts to take innovation forward

Housing Minister Esther McVey MP has announced a new expert advisory council tasked with the digital transformation of the property sector.

The new ‘Proptech Dragons’ will advise ministers on how to support and grow the sector further, which will make it easier and cheaper to plan, build and buy new homes.

Property entrepreneur Faisal Butt, founder and CEO of Pi Labs, a venture capital firm supporting others to innovate in the PropTech sector, will be the first expert to sit on the minister’s new council.

Introducing the new expert group, the Housing Minister said: "We’re taking every advantage that new technology has to offer across the entire house building and house buying journey. Whether that’s finding a plot of land, getting planning permission, engaging the local community, getting the property built or selling or buying a house".

The UK PropTech sector, a growing industry potentially worth £6 billion in the UK, is leading the world in the property building and buying market. It already receives 10% of global PropTech investment.

In October, the Minister also announced plans to release data held by local bodies including:

Opening up Compulsory Purchase Order (CPO) data for the first time in a transparency drive and enable PropTechs to obtain things like energy performance certificates and the square footage information of properties.
Introducing a national index of all brownfield data, simplifying and improving the quality of Brownfield Land Registers to help developers to find brownfield land to build on.

For more on this, click here.

Labour pledges £60bn for greener and zero-carbon homes

The Labour Party has set out plans to make all new houses zero carbon within three years, alongside a new £60bn programme of retrofitting for existing homes. It also announced a ‘Warm Homes for All’ strategy, which proposes that insulation, double glazing and low-carbon technologies are fitted to “almost all” of the UK’s 27 million homes.

Labour says the zero-carbon standard could be achieved through the use of better efficiency standards and renewable energy sources, and the installation of solar panels, efficient insulation and triple-glazed windows. The policy would also ensure that homes are not fitted with fossil fuel heating systems such as gas boilers.

The Warm Homes for All plan, which would run to 2030, would see low-income homes offered grants that would be paid off through savings in their fuel bills, while wealthier homes would be offered interest-free loans to carry out the work.

Labour said landlords “would be regulated to ensure their homes are energy efficient”. It said new rules would require social and private landlords to ensure their homes reach at least Energy Performance Certificate band C by the mid-2020s.

Major programmes of retrofitting under the Green Deal were carried out in the early 2010s. However, there have been issues with some of the work, particularly cavity wall insulation.

Last month housing secretary Robert Jenrick unveiled new plans for the creation of a new Future Homes Standard which aims to see fuel heating systems such as gas boilers banned from new homes and replaced by technology such as air source heat pumps and solar panels. A consultation for the plans is currently out and will run until January 2020.

Leasehold/block management

Agent sells first London apartments without ground rents

A London estate agency has announced that a new development just coming on to the market will be the first in London where buyers will not have to pay ground rent. Stone Real Estate says the apartments in question are part of a 72-unit development in Stoke Newington.

Newington Gate will consist of 32 private sale apartments, 12 shared ownership and 28 affordable rent apartments. It is a joint venture between Hill and Anchor Hanover who will manage the shared ownership and affordable rent - the latter for over 55s only. “Not only are we delighted to be offering these homes for sale but we’re proud to be leading change in the sector and doing so without any ground rents payable by the buyer” said Michael Stone, the agency’s founder and chief executive.

“Ground rents and their tendency to fluctuate have been a contentious topic in recent years and while the industry is considering scrapping them as a whole, we wanted to drive this change now, in order to benefit our buyers” he said.

Leaseholders set to benefit from faster broadband

A new law has been announced by the government with the aim of ensuring the nine million people in the UK living in blocks of flats have access to the nationwide upgrade to gigabit speed broadband.

In October, Digital Secretary Nicky Morgan announced that the measures will make it easier to install faster internet connections in blocks of flats where landlords repeatedly ignore requests for access from broadband firms. It is estimated that an extra 3,000 residential buildings a year will be connected as a result.

Under the law as it stands, to install gigabit-capable broadband in the UK’s estimated 480,000 blocks of flats or apartments, broadband companies must get permission from the building’s owner to enter the property and undertake the necessary works. One of the biggest obstacles preventing operators deploying new networks to residential blocks is the landlord’s failure to respond in any way to requests for access.

Operators say that 40% of their requests for access receive no response. While they already have an option available to push for access via the courts, this is costly and takes time. To solve the problem, the Government plans to create a cheaper and faster process for telecoms companies to get access rights. It will apply when a landlord has repeatedly failed to respond to requests for access to install a connection that a tenant within the building has asked for. It will give operators a cheaper and more streamlined route via the existing Upper Tribunal (Lands Chamber) to connect the property, lowering the timescale to enter a property from six months to a matter of weeks, and at a drastically reduced cost.

Is cladding guidance making flats unsellable?

As many as 600,000 people in England may be living in unsafe or unsellable high-rise properties due to a lack of government action and unclear advice over cladding safety, research from the Labour Party alleges.

New analysis estimates there are up to 600,000 people living in blocks over 18m, many of whom are struggling to sell their homes because they cannot confirm the safety of their buildings’ cladding.

In October, Inside Housing reported that surveyors and mortgage lenders are valuing properties well below their true value, or providing a value of zero, if building owners cannot demonstrate that the cladding meets the criteria of the government’s Advice Note 14.

Advice Note 14, issued in December last year, told owners of buildings above 18m to remove any combustible cladding unless it had passed a large-scale test or had a “robust” desktop study finding it to be safe.

Labour’s analysis is based on data from the English Housing Survey, which shows the number of households living in private tower blocks above 18m, combined with government data on average household sizes.

Shadow housing secretary John Healey said: “The government must now act to test suspect cladding, publish the results and force private block owners to remove and replace all cladding found to be unsafe.”

EV charge points: commonhold is not the answer, says leading provider

If flat owners want to install EV charge points in their block, they face an array of problems. These include restrictions on development or modifications within building leases, who pays for charge point installation, and how should costs be allocated among residents? George Freeman MP, Minister of State for the Future of Transport stated in a letter to Leading EV charge point provider Future Fuel in October, that commonhold will be the answer to leaseholders’ problems.

Director Jamie Willsdon disagrees. He approached the Department of Transport last month in the wake of the government’s consultation on proposed changes to the building regulations that aim to give every new residential building with a parking space, an EV charge point. Existing blocks have been excluded from the proposals and Jamie wants to know why.

Responding to Jamie’s questions, Mr Freeman says “With regard to ensuring leaseholders are not denied the right to install charging infrastructure, the Ministry of Housing, Communities and Local Government are working to make commonhold more widely used in which, unlike the leasehold system, the individual has absolute ownership over the property. We are also working with industry to ensure guidance is available to allow landlords to understand and have confidence in the installation of charge points at their properties”.

Jamie believes the government has “fundamentally misunderstood” the nature of commonhold and its likely impact on the many questions around EV charging raised by leasehold property. The communal areas of commonhold property are still owned by a separate entity to the unit owners – known as a ‘commonhold association’ and as such an individual still needs permission to install EV charging infrastructure, he says.

He is determined to continue his campaign on behalf of flat owners and will be following up on the Minister’s pledge to ensure that effective guidance around EV installation is made available to landlords.

PRS and B2R

Manchester tops latest B2R ratings

Homeviews has just published its latest report, rounding up more than 5,000 reviews from tenants living in 84 B2R and 438 build-to-sell developments across eight UK Cities and the message for B2R developers and operators is a positive one. New build developments are delivering for tenants, with more than two thirds of B2R developments getting ratings of more than 4 out of 5.

Plus points for residents are good communication, reliability, personalised service, kindness -and parties! Customer service and good building management really matter too, with 26 developments rated 4.5 and above for building management. These include schemes managed by Allsop, Essential Living, Fizzy Living, Way of Life, Greystar, be:here and Legal & General.

The Trilogy in Manchester tops the list for the highest rated B2R development in the UK and the city boasts three of the top ten rated schemes. When comparing the average ratings and scores from B2R tenants living in the regions to London, the regions scored higher on every rating.

To download and read the report in full.

Tallest modular residential building goes up in Croydon

Croydon is now home to the tallest modular residential building in the world, as a new high-rise B2R scheme nears completion. Tide Construction, which is developing the project on behalf of Henderson Park and Greystar, has craned into place the last of 1,526 modules which have been assembled on site to create two towers measuring 44-storeys and 38-storeys.

The 136m scheme – equivalent in height to the London Eye – will house 546 B2R homes that will be managed by Greystar. By manufacturing the buildings inside a controlled factory environment, together Tide and Vision Modular Systems, Tide’s offsite manufacturing company, will complete the project in just over two years – half the time it would have taken using traditional methods of construction.

Build to Rent sector continues to go from strength to strength

More than £2bn has been invested into the UK’s Build to Rent (B2R) sector in the first three quarters of 2019, according to the latest research from CBRE. Between January and September 2019, there was a total of £2.14bn of investment into the UK private rental sector for B2R schemes, including several forward-funding deals, and some direct site acquisitions.

Investment into the sector picked up in the third quarter of 2019. There was £743m of investment in Q3 2019, more than double the £359.4m recorded in the previous quarter. Forward funding transactions accounted for the bulk of activity by transaction type in Q3 (£630m). These were split between London and regional cities. Total investment into B2R over the last five years has now reached £10.6bn, CBRE’s tracking shows.

CBRE’s findings are backed by the latest figures from the British Property Foundation, which show there are now 148,046 B2R homes complete, under construction or in planning across the UK. This represents a jump of around 20% compared to the same period last year. The BPF says the number of completed units rose by 31% over the same period, to 34,840 and the average size of B2R developments is also growing.

In London, the number of B2R homes completed, under construction or in planning has increased by 35% in the past five years. Geographically, growth of the sector is spread evenly between London and the regions, with both areas seeing total growth of 20%. The number of BTR units inside the capital and in the regions is also similar at 63,200 and 60,337 respectively. However, in terms of units completed the regions saw the biggest increase, with a significant rise of 41% over the year to Q3 2019.

Social Housing

Sector Risk Profile published in October, the Regulator noted that social landlords have “benefitted from a generally benign economic climate” in recent years.

But it warned that it “is more important than ever that all providers test and understand the implications” of the UK’s departure from the EU. It added that “evolving requirements following the Grenfell Tower fire” are increasing risks further.

The risk profile also emphasised the importance of landlords having a good understanding of their existing housing stock, backed by “up-to-date data”.

Exposure to a slowing housing sales market, reputational risks affected by “business decisions and performance”, including board and executive team members’ conduct, and an “increasing interest in equity or structured finance” were also pinpointed as key areas of risk.

The regulator also called for landlords to ensure correct oversight of third-party contractors and adequate management of outsourcing arrangements.

Private rented sector: new toolkit for local authorities

The government has produced an online toolkit to help local authorities better understand their powers in respect of common problems in the private rented sector, such as overcrowding, unlicensed HMOs etc. It includes practical examples of common scenarios and possible remedies and details. For more information go to the website.

Scotland and Wales

Scottish property factor launches climate response

In response to the climate emergency Newton Property, one of Scotland’s largest property factors, has announced an Emergency Building Eco-Improvements fund up to £100,000 per eligible property.

The fund, which will be made available for any block of flats factored by Newton Property, will be offered as an interest-free facility to be used for a variety of energy efficient improvements to bring outdated buildings up to standard. This could include the installation of solar panels, battery storage, LED lighting upgrades, insulation and much more. The fund is the second phase of Newton’s environmental initiative following the launch of its 2020 Green Vision campaign last year

Derek MacDonald, Joint Managing Director of Newton Property, hopes the green initiative will encourage more management companies to follow suit.

Scotland’s social housing to be more energy efficient

Scotland’s renters will get warmer and cheaper-to-heat housing as a result of major investment, the Scottish Government has announced. The Energy Efficiency Standard for Social Housing (EESSH) aims to encourage landlords to improve the energy efficiency of social housing in Scotland. It sets a single minimum Energy Efficiency rating for landlords to achieve which varies dependent upon the dwelling type and the fuel type used to heat it.

Following public consultation, a new EESSH2 milestone has been confirmed that all social housing meets, or can be treated as meeting, EPC Band B (Energy Efficiency rating) or is as energy efficient as practically possible, by the end of December 2032 and within the limits of cost, technology and necessary consent

Technology like underfloor heating, ground source heat pumps and solar panels will be installed to reduce the carbon footprint of almost 900 social rented properties. Grants to pay for the work will be given to eleven social landlords through a £3 million second round of the Decarbonisation Fund.

The Scottish Government has also announced £17.6 million loan funding to support householders in 2019-20 to make their homes more energy efficient.

Scotland completes multi-million pound infrastructure projects

Significant progress has been made on major infrastructure projects in Scotland in the past six months, according to a series of new reports. These include 26,581 affordable homes built as part of the £3.3 billion affordable homes programme, according to Infrastructure Investment Plan reports which are now available online.

Welsh government considers ‘due regard’

The Welsh Assembly’s Housing Minister Julie James is considering adding ‘due regard’ to the right to adequate housing in upcoming legislation (Source: Inside Housing).

Speaking at a meeting of the Equality, Local Government and Communities Committee, the minister said she is “looking to put what we call a ‘due regard’ to the right to adequate housing” into the forthcoming Local Government (Wales) Bill.

If the government introduces this obligation, local authorities will have to consider the right to adequate housing when making all policy decisions. This will include prudential borrowing requirements, tenant policies and housing option policies.

Earlier this year, the Chartered Institute of Housing (CIH) Cymru, Shelter Cymru and housing equality charity Tai Pawb called on the Welsh government to make housing a legally enforceable human right.

Fire safety

Grenfell Tower Inquiry Phase 1 now completed

The Grenfell Tower Inquiry published its Phase 1 report in October (Source: Arden Chambers’ Housing View). The report deals with the events on the night of the fire, concluding that the fire started due to an electrical fault in a fridge-freezer in flat 16. The fire escaped from the flat via the uPVC windows. The use of uPVC window jambs in close proximity to combustible insulation allowed the fire to escape the flat and the polyethylene core of the cladding panels served as a source of fuel. This allowed the fire to spread across, up and down the tower.

According to the report there is “compelling evidence” that the Building Regulations had not been complied with. It also concludes that the London Fire Brigade was poorly prepared for a fire of this nature and fire fighters had not been trained to deal with cladding fires. The information held by the LFB about the Tower was inaccurate and inadequate and the “stay put” policy was kept in place for too long before evacuation was attempted. To read the full report, click here.

Questions over materials central to Grenfell Inquiry phase two

The second phase of the Grenfell Inquiry will focus on the choice of materials, material testing, the adequacy of building regulations, and the management of the London Fire Brigade (LFB) (Source: Inside Housing).

Writing in the phase one report, the judge leading the inquiry Sir Martin Moore-Bick, listed the topics to be investigated as part of phase two. He promised that the testing and certification of combustible materials will “lie at the heart” of his investigation.

Phase two of the inquiry, expected to begin early next year, will also pay close attention to the 2016 refurbishment of Grenfell Tower and will scrutinise how decisions over aluminium composite material (ACM) cladding and windows were made.

Grenfell judge: evacuation plans should be developed for all high-rise buildings

Sir Martin Moore-Bick, chair of the Grenfell Inquiry, has said that building owners should be required by law to develop evacuation plans for all high-rise buildings (Source: Inside Housing).

The judge also recommended an “urgent” inspection of fire doors in all properties with separate dwellings – not just high rises – as well as a range of other proposals ranging from improved fire signage to the provision of building plans to emergency services.

He stopped short of calling for the retrofitting of sprinklers in all tall buildings despite some of his expert witnesses “urging” him to, reasoning that he had not yet studied the evidence on this point.

On evacuation he calls for:

The development of national guidelines for carrying out partial or total evacuations of high-rise buildings – including protecting fire access routes and procedures for evacuating people who require assistance
Fire services develop policies for partial or total evacuation of high rises
Owner and manager be required to draw up and keep under review evacuation plans, with copies provided to local fire and rescue services and placed in an information box on the premises
All high-rise buildings be equipped with facilities to enable the sending of an evacuation signal to the whole or a selected part of the building
Owners and managers be required by law to prepare personal evacuation plans for residents who may struggle to do so personally, with information about them stored in the premise’s information box
All fire services be equipped with smoke hoods to help evacuate residents down smoke-filled stairs

The provision of evacuation strategies – which will include the retrofitting of manual or smart alarms to alert residents – will represent a giant shake-up of fire strategy for building owners and social landlords. Since 1962, the sector has relied on ‘stay put’ advice to residents, which is predicated on the building withstanding the spread of fire and actively discourages the use of alarms.

Government looks again at ‘stay put’

The Government is working on a “full and detailed examination” of the stay put strategy for high-rise blocks. (source: Inside Housing).

Appearing before the Housing, Communities and Local Government Select Committee earlier in November, housing secretary Robert Jenrick said that while expert consensus is that stay put is “valid” for most tall blocks, the government is still reviewing approaches to evacuation. He added that the Ministry of Housing, Communities and Local Government will work with the Home Office and fire services “to ensure this work is taken forward as a priority”.

Stay put is the advice widely given to those not directly impacted by the fire to stay in their properties with the windows and doors shut, with the expectation that the construction of the building will protect people from the spread of fire for a period of time. However, Dany Cotton, commissioner of the London Fire Brigade, said that stay put is “no longer viable” for some buildings and expert reports for the inquiry into the Grenfell Tower fire have said that the advice given to residents on the night of the fire should have been changed much sooner.

Mr Jenrick told the committee: “While the consensus among experts is that the stay put system remains a valid one for most high-rise blocks of flats, I think it is right that we subject that strategy to the fullest and most detailed examination”.

Health and safety

HSE releases work-related statistics

The HSE has published its latest statistics on work-related health and safety in Great Britain. Headline findings for 2018/2019 are:

1.4 million working people suffering from work-related ill health
2,526 mesothelioma deaths due to past asbestos exposures (2017)
147 workers killed at work
581,000 injuries occurred at work according to the Labour Force Survey
69,208 injuries to employees reported under RIDDOR
28.2 million working days lost due to work-related ill health and workplace injury

For more information click here

Legislation

Consultation launched into tighter home energy efficiency

Housing secretary Robert Jenrick has announced plans to change the building regulations and develop a Future Homes Standard. This could ban gas boilers and oil heating from all homes built after 2025, replacing them with with cleaner technology such as air source heat pumps and solar panels. The Government has launched a consultation and views are now being sought on the proposals and on the role local authorities could play in getting the best energy standards from developers.

This is the first of a two-part consultation regarding proposed changes in England to the Building Regulations. The second is expected shortly and will consider the introduction of increased energy efficiency requirements for existing domestic buildings and new and existing non-domestic buildings.

Further consultation on the technical detail, guidance and impact of the proposed Future Homes Standard is expected to be published in 2024 following a period of research.

To read and download the consultation.

Don’t ignore new septic tank regulations

If you manage a block with private drainage into a watercourse, then you and your client need to be aware of new regulations that come into force in January. Hamptons International is urging all homeowners to be aware of new septic tank regulations, which requires all homes which are not connected to a mains sewage network to review, upgrade or replace their non-mains system by 1 January 2020. This is particularly important for anyone who wants to sell their property in the New Year.

The General Binding Rules for small sewage discharges (SSDs) have been put in place to protect England’s surface water resources (e.g. rivers, streams etc.) from pollution caused by septic tanks and other small-scale sewage treatment plants. Under the new regulations, it is no longer permissible to discharge low quality effluent from septic tanks directly into ditches, streams or other watercourses. Instead, there is now the option of replacing or upgrading systems to incorporate a drainage field. This is also known as an infiltration system and means the effluent can seep into the ground instead, for further treatment by soil bacteria.

Andrew Marshall, Regional Director of Hamptons International explains: “The changing legislation cannot be ignored for those who are not connected to a mains drain, and the responsibility lies with owners to understand their private drainage system and therefore any changes they may need to make to comply.

“New rules came into effect in 2015, when 2020 felt like a long time away; but it is now just weeks away. We are speaking to a number of homeowners across the country who are looking at selling but have not acted on this new legislation, some of whom are surprised by the breadth of work required... this is an issue that needs to be addressed to abide by the new regulations.”

ALEP: review the ‘two year rule’ to simplify enfranchisement

The Association of Leasehold Enfranchisement Practitioners (ALEP) has written to Housing Minister Esther McVey, calling on the government to review and improve flat owners’ rights to extend their leases. The Association's letter to the Minister highlights the issue of the current two year wait regulation that applies to leaseholders wanting to purchase the freehold of their property.

John Midgley, ALEP Director, explains: “At present, under current legislation, leasehold property owners must have been the registered owner of their property for at least two years before being eligible to extend the lease of that flat. This is inconsistent with a flat owner's immediate right to join in with other flat owners to acquire the freehold of their building under the collective enfranchisement provisions of leasehold reform legislation. The time limit for lease extensions may be avoided by some purchasers of flats if the sellers had already qualified for a lease extension and had formally brought a lease extension claim.

“A lease of a flat is a depreciating asset. If a new owner must wait for at least two years to be able to exercise his or her rights, it could cost them a significant sum to extend their lease. ALEP campaigns for fairness and transparency and has been advocating this simple, logical change for years.”

The letter asks the Minister to look at amending the two year rule as part of a future Housing Bill that could be contemplated at the next Queen’s Speech.

For more information click here.

Legal update

When is it reasonable to refuse a change of use?

Mark Loveday looks at this key case that turned on the refusal of consent

In the recent case of Sequent Nominees Ltd v Hautford Ltd [2019] UKSC 47, the Supreme Court held, by a majority of three to two, that a landlord’s refusal of consent to an application for change of planning use was reasonable.

The facts of the case were this. The tenant leased a building in Soho. The top two floors had planning consent for residential, and three floors were commercial. The tenant wished to apply for planning consent to convert part of the commercial to residential. However, the landlord was concerned this would expose it to a claim for collective enfranchisement under the Leasehold Reform Housing and Urban Development Act 1993.

At the date of trial there were just under 70 years unexpired on the lease. The lease included no restriction against alienation (until the last seven years of the term) and permitted residential use, but it required the tenant “to perform and observe all the provisions and requirements of all statutes and regulations relating to Town and Country Planning and not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld.” The landlord refused consent on the ground that giving consent would increase the prospect of a successful claim by the tenant to enfranchise.

What was the decision?

The Court of Appeal found the landlord’s refusal of consent was unreasonable, because this would re-write the user covenant. In the Supreme Court, Lord Briggs (with whom the majority agreed) held that the landlord could withold consent.

Seeking to avoid a significant increase in the risk of enfranchisement was the “quintessential type of consideration rendering reasonable the refusal of consent”. On “a down to earth factual analysis of the economic consequences to the landlord of giving or refusing the requested consent” the refusal of consent was reasonable. The user clause did not confer an unqualified right for the tenant to use the premises for its chosen purposes and it must be read together with the separate planning covenant. The tenant was only allowed to use the premises as permitted by the planning regime.

Why is this case of interest?

The case is favourable to landlords for three reasons. First, because these covenants are very common in leases and they allow landlords to refuse consent to proposals by tenants, even where the proposals do not breach user covenants or alienation provisions. And second, because the case confirms the risk of creating rights to enfranchise under the 1993 is a proper “estate management” ground for a landlord to refuse consent generally.

Other must-read cases

Ghosh v Hanover Gate Mansions Ltd [2019] UKUT 290 (LC)

An oral agreement with a supplier can be a Qualifying Long-Term Agreement for the purposes of s.20 Landlord and Tenant Act 1985 - and require consultation with the lessees. The Upper Tribunal held that an oral management agreement with agents took effect by performance when management services commenced on 12 June 2017.

Mark Loveday is a leading Barrister with Tanfield Chambers specialising in leasehold management and enfranchisement work

Go to the Resource Hub for more. Case law is updated on a regular basis.

Talking points

Is leasehold reform a “real vote winner” – what do you think?

Following the delay in publication of the Law Commission’s report on improving the lease extension process, leasehold campaigner Louie Burns has set out a 10-point plan designed to drive forward reform in the sector.

Burns is managing director of enfranchisement specialists The Leasehold Solutions Group. He regards progress made on leasehold reform to-date as simply “empty promises”. In response, Burns has set out his own manifesto, proposing the radical reforms that he believes are necessary. The wish list for government was published earlier this month in Landlord Today and proposes a number of changes.

Ban the sale of all leasehold houses, as the law has not been changed and developers are technically still able to sell houses on a leasehold basis.
Set ground rents on new build flats to zero, as leasehold properties are still being built with onerous ground rents.
Prescribe the valuation elements for lease extensions and freehold acquisitions, to make the process of enfranchisement easier and cheaper for leaseholders.
Stop leaseholders paying for the removal of flammable cladding, as leaseholders were not responsible for choosing the construction materials for their block and bought their properties in good faith.
Regulate managing agents, to ensure that leaseholders receive fair treatment at an acceptable cost and in a transparent manner.
Change the qualification criteria for freehold purchases, to ensure that all buildings can legally qualify for a freehold acquisition by the leaseholders or the Right to Manage process.
Ban the AST loophole, to ensure that freeholders can no longer force leaseholders into forfeiture of their property by converting the lease into an assured shorthold tenancy.
Introduce Right to Manage for estate charges, to give leaseholders on estates the right to challenge unfair charges, ensure that charges are reasonable and change their rent charge owners where necessary.
Ban informal lease extensions and freehold purchases, to ensure that leaseholders use and are protected by the statutory enfranchisement mechanism.
Make forfeiture of leasehold properties illegal for minor infringements, to protect leaseholders from disproportionate punishment if they owe small amounts of ground rent (e.g. £350) or cannot pay fees for major works.

Burns believes leasehold is an anachronism. “It defies logic and fairness and is utterly unfit for the 21st century,” he says. With a pre-Christmas election now confirmed, he thinks leasehold reform is a real vote winner. “Leaseholders need to make their voices heard now by petitioning their MPs harder than ever, or face losing the chance for significant leasehold reform for another generation.”

Gas v electricity: what’s the cleanest form of energy?

Will electricity soon be replacing gas in the blocks you manage? James Paul takes a closer look at the gas v electric debate.

We’ve been hearing for years that gas boilers are on their way out. The driver for this is that by the time the UK hits its renewables target in the late 2020s for zero carbon electrical generation, theoretically it will be better for the environment for us to heat our homes and water through a combination of heat recovery systems, better insulation and a minimal amount of ‘booster heating’ than to use A+ rated gas combi-boilers.

But if the UK shifts to electricity for heating will it really mean a lower carbon footprint for us all? That all depends how you measure it. We as property professionals need to be very clear about what we are measuring, and what it is actually a measure of.

So is electricity really cleaner than gas? You could write a book on this one. How is your electricity produced: through fossil fuels, or through so-called renewables? Are renewables green? Is there a carbon footprint to constructing a massive windmill in the middle of the North Sea with component parts made of steel, plastic and fibreglass that will one day need to be replaced themselves? Yes, of course there is. But is it lower than the footprint produced by coal fired power stations per kWh of power produced? Yes possibly, but even this question doesn’t have a simple answer. What about nuclear, geothermal, bio-mass co-firing?

There’s a big back-lash at the moment in Germany over deforestation of the Black Forest which is apparently necessary to carpet the area with a wind farm. The German Green Party is being accused by others of not being holistic enough in its thinking, and consequently damaging the environment. The location doesn’t have a particularly strong natural wind resource anyway. The debates will rage on.

And what about electric cars - are they really green? What about the environmental costs of mining the world for lithium, cobalt, platinum, and other rare metals for batteries?

Despite all this, we still need to bear in mind that 50% of the UK’s carbon footprint apparently comes not from air transport, cars or coal fired power stations, but actually from heating our homes with gas. At one point in the twentieth century gas was heralded as a ‘clean’ fuel that stepped us away from reliance upon coal. That thinking has changed and we are now being steered towards electric solutions instead.

In practice, electrical heating will probably be a mixture of air-conditioning/comfort cooling as it can be put into reverse to heat houses during the winter. No doubt these will be used in conjunction with electric-boosted ground-source heat-pump fed underfloor heating, and electric radiators and electric storage heaters here and there. Certain buildings such as schools and hospitals will likely still use district heating or CHP plants which will inevitably run on gas for the foreseeable future. But yes, if present rumours are correct, it does seem that electric heating and hot water will be making a return.

James Paul is a director with Earl Kendrick

Topic of the month

Bats in the belfry? Don’t panic, just plan ahead

Property managers should beware - and be aware - of bats in buildings if roofing or other renovation works are planned for your blocks.

The UK is home to 18 species of bats and all have European protection. As such, special consideration has to be given to them when undertaking building projects where bats have taken up home, as not only do bats have strong legal protection, their roosts do too. This means it is illegal to disturb, kill or injure them or to damage, destroy or obstruct access to a bat roost. Over the winter months, bats hibernate to stay out of the cold weather and residential buildings in particular, present an ideal warm roosting site for female bats to rear their young.

It is very rare for bats to cause any damage to properties and in most cases, people don't even know that they share their home with bats. However, maintenance and alteration work to buildings can adversely affect bats and their roosts. Having bats does not mean that work to buildings cannot take place, but expert advice will be needed on how to proceed.

Scottish property consultancy Galbraith reports that bats in buildings are an ever-increasing problem when it comes to undertaking renovation works. Galbraith has advised a number of clients on how to deal with bats and other protected species while undertaking building projects. Special measures have to be implemented to adhere to ecological legislation and project design has to be carefully considered where bats have been found to be occupying a building. Failure to comply with legislation can lead to criminal prosecutions.

In many cases a series of ecology surveys will be required to be carried out by specialist ecologists, over a period from May to August when bats are out of hibernation and before works can commence work may need to be licenced.

James Taylor, of the Galbraith building surveying team, offers this advice: “When planning any project that creates a risk of disturbance to bats, or indeed any other protected species during their breeding cycle, it is vital to start preparations early and plan ahead.

“There are a range of measures that can be undertaken including the timing of the work to avoid the breeding season, installation of bat boxes to re-house any bats found during the work and specifying the installation of lead slates in new roofs to maintain access for bats in future.

“The use of under-slate breathable membranes can be problematic where bats are present as bats can become entangled in the membrane. Therefore, the design of the roof has to be carefully considered and the introduction of alternative roof felts and roof ventilation factored in, depending on the roof structure and design.”

Defects database

Timber decay in older buildings

Deirdre O’Donovan takes a closer look at the problems posed by wet and dry rot

Is the building you manage a period property or historic building? If so, timber is likely to be an integral part of the structure. If not properly maintained, it can suffer from damage and decay. One example is rot.

For rot to take hold in timber there must be several elements present; the fungal spore which introduces the rot, the timber as a food source and crucially, moisture. The most common types of rot in the UK are wet and dry rot.

Timber rotting fungi can be divided into two groups, according to their effect on timber.

Brown rots cause the timber to become darker in colour and to crack along and across the grain (cuboidal cracking). Dry rot and many common wet rots are within this group.
White rots cause the timber to become lighter in colour and has longitudinal cracking without significant cracking across the grain. All white rots are wet rots.

There are many different types of wet rot fungi, however there is only one dry rot fungus: Serpula Lacrymans. To control an outbreak of rot, it is first important to locate and eliminate all sources of moisture and to promote rapid drying, as timber rotting fungi cannot grow on timber below a 20% moisture content.

It is then essential to establish the size and significance of the attack and to remove and replace the rotted timber with preservative-treated timber and to introduce support measures such as the provision of adequate ventilation or damp proofing membranes to break the contact with damp masonry, for example.

If structural timbers are affected, immediate measures may be necessary to ensure the safety of the building and its occupants. A full structural survey should be arranged to determine if structural repairs are necessary.

Wet Rot

A wet rot fungus will feed on damp timber and is prevalent in sub-floors where joists can come into contact with moisture or is often caused by defective plumbing or guttering. Wet rot requires a higher moisture content of around 50% (compared to 20-30% for dry rot) to grow and will be localised to the area of the greatest dampness. Badly affected timbers may need replacing.

Dry Rot

The Dry Rot fungus, Serpula Lacrymans, is less common and is commonly found within moist, unventilated constructions. Often the first sign of dry rot is a ‘fruiting body’, which looks like a fleshy pancake, which overtime matures to a rusty red colour. The fruiting body generates a significant quantity of spores, which settle as a reddish brown dusty layer. Dry rot can grow and spread using a mass of delicate strands of hyphae known as mycelium to adjacent masonry, which may appear as white silky sheets. This ability to spread means that the dry rot fungus can also grow on the surface and within other inorganic substrates such as brick and plaster, however the growth is only sustained by continued nourishment from the cellulose in the timber.

In the case of dry rot, all spores should be removed and as with all timber rot, the area ventilated to promote drying. The timbers affected by Dry Rot also should be cut away to at least 300 – 450mm beyond the last indications of rot, however this is not a hard and fast rule

Deirdre O'Donovan is a building surveyor with Earl Kendrick

IRPM Events

Go to the Events page for more information

03 February 2020: Associate Exam Preparatory Workshop - London

04 February 2020: Associate Exam Preparatory Workshop - London

06 February 2020: Associate Exam Preparatory Workshop - Manchester

04 March 2020: Associate Exam - London & Manchester

17 March 2020: Associate Exam - Glasgow

21 May 2020: Annual Seminar 2020