The month in brief
Welcome to the February issue of the Technical Update. Since we published the January issue, we have a new Housing Minister - the tenth in a decade - and a new Chancellor. The impact of these changes will play out in the months to come but as a valued voice at the MHCLG we look forward to working with Christopher Pincher and hope he stays in post long enough to bring some much-needed continuity to his minsterial role.
As we continue to report on the problems being created for our sector - and our customers - by combustible cladding, scroll down to Andrew Bulmer's column to read how the industry is now coming together to put pressure on government to act.
In this issue we also take a look at the trend for corporate structures in the BTL sector and pass on some advice for the Brexit transition period from the HSE. This month Tetra consulting continues its series on the new building safety regime and our Talking Points look at staff retention and proptech. Our Topic of the Month this time round takes a closer look at the ways one property management company is helping combat loneliness among its residents.
As ever, we welcome your news, views and comments. If you have an article or just an idea for one, please contact the Editor at lesley@davisaylingmedia.co.uk
Contents
IRPM News
CEO’s column | Tickets for 2020 Annual Seminar selling fast | Tech Insights Programme kicks off with building safety
Leasehold/block management
Government "no help" in cladding crisis say leaseholders | London block is first to get cladding cash | New housing minister is tenth in ten years
PRS & B2R
Government is failing landlords, says RLA | Corporate structures gain momentum in BTL market | Grainger brings B2R to Milton Keynes
Social Housing
First Homes could threaten affordable housebuilding, say HAs | Half of council homes with hazards are in Lewisham
Scotland and Wales
Scotland commits £300m to deliver “good quality, secure and affordable homes”
Health and safety
Transition period advice from the HSE
Fire safety
Government enforces three-monthly fire door checks | Stop making excuses, Hackitt tells industry
Legal update
Mark Loveday looks at a recent case that impacts on property managers
Talking points
Don't let your talented staff walk away | How legislation is holding back tech solutions
Topic of the month
Care in the community: how property managers can help combat loneliness
Defects Database
How safe are your electric gates?
IRPM events
What is happening, when and where?
What’s new on the Resource Hub?
IRPM News
Many voices speak as one to Government
Andrew Bulmer outlines the role played by the IRPM, as the property industry calls on government to act decisively to end the cladding crisis.
On 11 July 2019, IRPM called it. We told government they would need to make money available to fix unsafe buildings. That the ACM cladding debacle was the tip of the iceberg. That widespread fire safety failings were being discovered in existing buildings. That we didn’t know how many buildings would be affected but evidence suggested it could be very many indeed. We said government would have to put its hand in its pocket to help flat owners make their buildings safe, be it by loans, conditional funding or whatever and it would cost billions. Ultimately, only Government could rescue flat owners out of their situation.
Government rejected the call, which we expected. And fair play, why should the taxpayer bail out the failings of the private sector? It didn’t build these buildings, after all. The private sector should sort itself out.
Except successive governments have changed the rules that have allowed this to happen. Over decades, governments have set building regulations, certified materials and managed the building inspection regime. It’s tricky pointing the finger at developers who used certified materials in compliance with building regs. And if Government has been part of the problem, it needs to be part of the solution.
But developers are part of the problem too. If you are going to build, at least build right. Reports of poor construction are still flooding in; missing fire stopping and breached compartmentation being far too common. Certainly, building control should have picked it up, but that’s like blaming the police for failing to stop a crime. So, developers (some, not all) are also part of the problem and need to be part of the solution too. Government needs to lend a hand on that, because neither leaseholders nor agents can fight that fight. And government has levers, such as the Help to Buy fund.
It is a pity that it has taken from last summer until now to get some joined-up action by the private sector. In June last year we highlighted the issue at the Annual Seminar and by autumn we were running building recovery scenarios at the Regional Seminars. Mortgage lenders had long since called the issues and Tribunal cases had decided leaseholder liability. From then on, this was only ever going one way. If a building can’t be fixed through a warranty or by a returning developer, then it falls to flat owners to pay. It is blindingly obvious that not every owner in the country can afford to pay their share of fixing their building and the money needs to come from somewhere. QED, government needs to step in as a funder of last resort, not to bail out the private sector but to make homes safe for people who can’t do it themselves. Litigation on liability can follow and we can look to examples of FloodRe and the asbestos compensation scheme for help.
Happily, joined-up action has now happened. Some of the bigger property management firms got together and called the gathering that resulted in the open letter to the Chancellor, sent this Monday by agents, residents’ groups (including LKP), IRPM, ARMA and trade bodies, and freeholders. It simply repeated last summer’s message, that government needed to help. But it is a very good thing that stakeholders from all sides of our sector are now saying the same thing in chorus.
Government needs to help. Reserve funds are running out, buildings need fixing now. If Government fails to help, then that is putting money ahead of safety. IRPM is a professional body, not a trade body. It does not lobby, but it has a trusted voice and it robustly speaks truth to power. IRPM spoke this truth to government and industry stakeholders last summer. Industry stakeholders must continue to put real energy into working together and with government, to make our residents safe and bring back confidence to our construction industry.
The open letter to the Chancellor is below:
The Rt Hon Rishi Sunak MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Rd
Westminster
London SW1A 2HQ
23 February 2020
Dear Chancellor of the Exchequer,
We the undersigned represent homeowners, property managers and building owners across the United Kingdom.
The Grenfell tragedy has uncovered one of the biggest safety crises in recent British history. Two and a half years on, people are still living in apartment buildings with dangerous cladding. Building safety policy, dating back decades and overseen by governments of all political colours, has failed in its totality.
Building owners and property managers are stepping in to fix these buildings and ensure the safety of residents.But, where the costs are not recoverable from the original developer, or through an insurance claim, the burden is falling on those who live in these buildings. Why should homeowners pay the price for such a systemic failure?
The Government deserves credit for funding Grenfell-style ACM cladding remediation, but the problem is much wider than this and that funding doesn’t go far enough. The list of unsafe materials and hidden safety defects that were never identified when these buildings were signed off, is growing by the day.
This new government now has a golden opportunity to right the wrongs of the past and rescue the hundreds of thousands of worried and vulnerable residents across the country.
On behalf of homeowners, building owners, and property managers, we are urgently calling the Government to establish a multibillion-pound emergency fund and work with industry to unblock the process and ensure the safety of residents up and down the country for generations to come.
Signed
Property managers
Fexco Property Services
FirstPort Property Management Services
HML Group
Mainstay Group
Premier Estates
Rendall and Rittner
Residential Management Group
Scanlans Property Management
SDL Property Management
Trinity Estates
Resident groups and professional/trade bodies
Association of Residential Managing Agents
British Property Federation (BPF)
Federation of Private Residents Association (FoPRA)
Institute of Residential Property Management
Leasehold Knowledge Partnership
UK Cladding Action Group (UKCAG)
Freeholders and building owners
Consensus Business Group
Estates & Management
HomeGround Management
Long Harbour
Simarc Property Management
Wallace Partnership Group
Andrew Bulmer is IRPM CEO
Tickets for 2020 Annual Seminar selling fast
Sajid Javid MP fired the gun for mandatory regulation and qualifications in 2017 but they didn’t get a mention in last December’s Queen’s Speech. Will it happen and if so, when?
Dame Judith Hackitt is pushing hard for culture change in the safe management of buildings. Some of that did made it onto the Government’s agenda, but is all that change really going to happen?
Do we retrain, or sub-contract for the Building Safety Manager role, and who is going to be the all-important “Accountable Person”? What will all this cost, and who pays? Dame Judith asks why anyone would wait until the law changes to improve safety and save lives - a good point, though not without some serious challenges.
These are just some of the big questions facing our industry in 2020. At this year’s Annual Seminar, to be held on 21 May at the QE11 Conference Centre in Westminster, we will take a look at these issues and more.
This market-leading event will also include our legendary legal updates and the opportunity to meet industry suppliers and network with your peers.
Our Platinum sponsors this year are 4Site Consulting and Data Energy. Watch this space as we announce our speakers and more sponsors in the coming months.
Early bird ticket sales have now ended. We sold more than expected but have put more tickets on sale – they are selling fast so don’t miss out.
Tech Insights programme kicks off with building safety
In recent years, we have seen data and technology rise up the property management agenda. A recent member survey revealed:
• 88% of members feel that customer expectations are changing around how property managers should use data and
• 89% believe that technology will change the roles that we do?
Against this backdrop the IRPM has developed a Tech Insights programme, bringing together a small number of thought leaders around a specific topic for the benefit of the whole Residential Property Management sector.
Post-Grenfell, the way we approach compliance to safety standards, from initial design through to occupation and beyond, is about to change out of all recognition. Building data will be key.
With this in mind, the first stage of our Tech Insight programme explored how technology could impact building safety, with a particular emphasis on fire safety. In January, we brought together a group of industry experts for a discussion that centred on the impact of technology on building safety and the barriers to implementation.
Later this year we will be publishing a series of White Papers based around these conversations and setting out the direction of travel that they are signposting for IRPM members.
Leasehold/block management
Government "no help" in cladding crisis say leaseholders
A staggering 90% of leaseholders living in homes with dangerous cladding think the government has been “no help at all” to them, according to a recent survey carried out by the Leasehold Knowledge Partnership (source: Inside Housing).
Flat owners across 117 different sites affected by cladding issues were polled and not one of the 177 people questioned thought the government had done a good job in finding solutions to the problems they face.
More than two thirds (62%) of respondents to the survey said they have used a waking watch to help keep their blocks safe since the Grenfell Tower fire. Of those, 86% said the waking watch is still in place. The majority of leaseholders responding to the LKP survey said they had not been offered any financial options by their landlord to help pay to correct cladding issues.
More than 80% said they knew of someone at their site who had been unable to sell their flat because their buyer couldn’t get a mortgage as a direct result of questions around the cladding on their building.
The government fund for removal of dangerous cladding only applies to aluminium composite material (ACM) cladding. Only 16% of respondents had ACM or ACM plus other materials on their blocks, while 54% said they had non-ACM cladding. And around a third of those surveyed still did not know what type of cladding they had on their building.
The survey results were published in February as MPs from both sides of the house met at Westminster Hall to debate the problem of leaseholders trapped in flats clad with dangerous materials, who are unable to sell or remortgage.
Hilary Benn, who led the debate, said that extending the fund to all types of dangerous cladding was “the only fair way forward and the only way of meeting the objective of removing all unsafe cladding”.
London block is first to get cladding cash
Only one of 56 privately owned blocks in London with ACM cladding and eligible for government help has so far received funding according to a report in Inside Housing.
Earlier this month, £49,496 was given to the owners of one undisclosed London block to help with “pre-tender support”. Two others have been approved for funding, with one due to get £95,516, the other £25,104.
A nationwide pot of £200m has been set aside to help remediate privately owned blocks with ACM cladding. The money agreed so far only covers initial work, such as erecting scaffolding, and full applications will have to be made once the full cost of removal and replacement is calculated and designs submitted.
Progress on applications for the capital’s 53 other eligible buildings remains unclear, and across the country, 174 privately owned, ACM-clad tower blocks have yet to be remediated. The government has threatened to name and shame this month the owners of those blocks where work has yet to start.
New housing minister is tenth in ten years
Christopher Pincher has been named as the new housing minister, following Boris Johnson’s Cabinet reshuffle earlier this month. He replaces Esther McVey whose tenure lasted only seven months. The new minister is MP for Tamworth. He is the 19th housing minister since 1997, and the tenth in the last decade. Robert Jenrick who last year replaced James Brokenshire as secretary of state at the Ministry of Housing, Communities and Local Government retains his position at the ministry.
Christopher Pincher tweeted that he was “delighted” to be appointed as housing minister and immediately received numerous responses from members of the public and campaign groups struggling to deal with unresolved cladding issues. A blog post from Mr Pincher in 2017 in response to the Grenfell tower tragedy shows that he is well versed in the issues surrounding dangerous cladding. However, his competence to deal with the problem will be judged by his actions.
PRS & B2R
Government is failing landlords, says RLA
The Residential Landlords Association has responded to a series of new PRS statistics released in February by saying the government is “failing landlords” (source: Landlord Today).
Just 18 individual landlords and property agents and five companies have been registered on the database of rogue landlords for offences committed since April 2018. According to the Residential Landlords Association (RLA) this points to the fact that either the number of problem landlords is not as high as many have argued or local authorities are focussing too much time on licensing good landlords instead of rooting out the criminals.
Government statistics published earlier in February reveal that it now takes an average of almost six months for the courts to process claims for repossession of their property. This time lag is highly detrimental to landlords because, during this time, tenants may be refusing to pay any rent, indulging in anti-social behaviour or damaging the property. Add to this recent tax increases including restricting mortgage interest relief to the basic rate of income tax and a 3% duty levy on the acquisition of additional properties and the negative impact of government policies towards landlords is laid bare, says the RLA.
According to the latest figures from the RICS, private sector rents are set to increase by 2% over the next year as demand from tenants continues to outstrip supply. John Stewart, policy manager for the RLA, commented: “The drop off in supply caused by good landlords who find operating in the market more difficult means it is increasingly difficult for tenants to secure somewhere to live and they are then faced with higher rents”. Government policy is now taking its toll on the PRS and “it is tenants who are suffering,” he said.
With a new housing minister in post, the government now needs to “change course and instead of attacking the private rented sector, there should be policies and taxation to encourage growth in the supply of rental accommodation to meet the ever increasing demand,” Stewart said.
Corporate structures gain momentum in BTL market
Could corporate structures increasingly replace individual purchases in the buy-to-let sector in response to tax relief changes? According to a report in Letting Agent Today, this is already happening in the prime central London market.
In April, the current system for individual investors claiming tax relief on buy to let mortgage interest rate payments comes to an end, making the creation of a corporate structure for multiple BTL investments a more attractive proposition.
“There are numerous advantages to this kind of approach and we are seeing considerable interest from clients in continuing to invest in residential PCL property as corporate buyers” says Camilla Dell, the founder and managing partner at the Black Brick agency.
The agency says that financing costs are fully tax deductible for corporate entities, significantly reducing ongoing costs, while purchases of six units or more in a single transaction qualifies as a commercial property transaction. These attract zero stamp duty on the first £150,000 of value, 2% on the next £100,000, and 5% on the value above £250,000. These figures are far lower than residential stamp duty levels for individual investors.
Grainger brings B2R to Milton Keynes
Renters in Milton Keynes will soon have the opportunity to sign up for apartments in the city’s first build to rent development, to be launched in April. Solstice Apartments built and operated by Grainger, will offer a mix of 139 one and two-bedroom apartments. Apartments come complete with all utilities ready to go from day one, a selection of stylish furnishing options available and fully integrated appliances.
Grainger has fully digitised the lettings process through its new technology platform, allowing customers to organise viewings and sign leases online. Residents will also be able to request repairs and reserve resident amenity areas for private events online. Grainger is directly managing Solstice Apartments, meaning there will be a dedicated on-site team to assist with resident requests and needs.
Social Housing
First Homes could threaten affordable housebuilding, say HAs
On 7 February, Housing Secretary Robert Jenrick announced the Government’s new First Homes initiative. The scheme will offer first-time buyers new homes at a 30% on market value, with the discount funded via Section 106 developer contributions.
The aim is to allow local people who are unable to afford a home to buy in their own area, rather than be forced to look elsewhere by escalating house prices. The discount will apply to a proportion of new homes, with the government consulting on how this will be delivered.
Veterans will be prioritised for housing as part of the Armed Forces Covenant and councils will also be able to use the scheme for key workers such as police and prison officers, nurses, firefighters and teachers.
However, there was some criticism of the scheme from the affordable housing sector, which raised concerns about dilution of the Section 106 funding currently available for other affordable tenures, which it is feared, could ultimately lead to fewer affordable homes being built. Kate Henderson, chief executive of the National Housing Federation said that if the proposal was to go ahead, the sector would need to see a significant increase in government funding to ensure genuinely affordable housing would still be built to the levels needed.
Half of council homes with hazards are in Lewisham
More than half of the council homes in England identified as having ‘serious hazards’ are owned by a single London borough, according to official figures released in February (Source: Inside Housing)
Government statistics on the condition of council housing stock revealed there were 8,107 homes with ‘category one’ hazards across the country at the end of 2018/19. Of these, more than half were owned by Lewisham Council. The council owns around 14,000 homes, which are managed by ALMO Lewisham Homes.
However despite these apparently shocking findings, when questioned, the local authority explained its figures were so high because it counted all homes with a non-compliant fire door or “inadequate fire compartmentation” as a category one hazard. Other councils failed to do the same. “Fire safety issues often score as a high category two hazard but in light of the Grenfell Tower and Lakanal House tragedies, we have given greater weight to the lack of fire doors or inadequate fire compartmentation,” said a spokesman for the borough council.
A 'hazard' is defined by the government’s housing health and safety rating system as the danger that can happen as the result of a deficiency in the place and which could cause harm and is given a risk-based score between bands A and J. Serious hazards with scores between A and C are classed as category one hazards, meaning councils are legally required to take action to rectify the issue. Other examples of hazards include damp and mould, extreme temperatures, carbon monoxide and asbestos.
Milton Keynes reported the second highest number of council homes with category one hazards, with 2,029, although it told Inside Housing that this was an error. Epping Forest had third most with 344, followed by Cambridge with 271 and Southwark with 229.
Scotland and Wales
Scotland commits £300m to deliver “good quality, secure and affordable homes”
In its Budget in February, the Scottish Government announced a £17 million increase to help meet its commitment to deliver 50,000 affordable homes over the course of this parliament. A further £300 million was also committed for 2021-22 to ensure affordable homes continue to be delivered beyond the current parliamentary term.
Official statistics on the Affordable Housing Supply Programme show that 65,334 of more than 89,000 affordable homes delivered since 2007 have been new build, with 18,474 being open market purchases and 5,560 refurbishments
In the four years to 2019, the Scottish Government has delivered over 80% more affordable homes per head of population than in England - 147 homes per 100,000 population, compared with 80 in England
During the same period, there have been eight times more social rented properties delivered in Scotland per head of population than in England - 93 homes per 100,000 population in Scotland compared to 11 in England
Health and safety
Transition period advice from the HSE
The UK left the EU on 31 January and we are now in a transition period until 31 December 2020, while negotiations with the EU take place about our future trading relationship. During this transition period employers' duty to manage risk in the workplace will not change.
Good health and safety is good for business and the HSE aims to help organisations manage risk well and proportionately, to help maintain standards and keep people healthy and safe.
To stay updated on what you need to know during the transition period, the HSE has provided a set of dedicated Brexit webpages.
Fire safety
Government enforces three-monthly fire door checks
A new requirement for fire doors in blocks of flats to be checked every three months is expected to be included in the Government’s forthcoming Fire Safety Bill. According to a report in Inside Housing, the MHCLG is questioning building owners over the feasibility of quarterly fire door inspections as part of a new fire safety regime.
Sir Martin Moore-Bick recommended the checks, as well as that fire doors should all be fitted with self-closing devices, in his Grenfell Tower Inquiry phase one report. There is currently no specific legal requirement to check fire doors at certain intervals, but legislation requires them to be maintained.
A government source was quoted in February, saying that the bill will implement all the inquiry’s recommendations, including the three-monthly fire door checks.
Stop making excuses, Hackitt tells industry
According to Dame Judith Hackitt, the construction industry lacks the leadership to make the changes needed to improve safety (Source: Building). Speaking at a conference earlier in February, Dame Judith said the industry was making excuses for its inaction and must instead drive forward the required changes.
Her comments were made in response to the public inquiry into the Grenfell Tower fire, in which many of the firms involved have blame each other or the government for the catastrophic failures that led to the tragedy in June 2017. “…there’s a lack of leadership, there’s a lack of real drive and collective commitment…” she said.
She also complained that change was happening too slowly, despite her review of fire regulations having been published over 18 months ago, and the government having set out its plans for how things will change.
“We need a culture change in this industry. You need to care about the buildings that you are in the supply chain for. You need to care that the people who are going to live in them and work in them and sleep in them feel safe and are safe. Until you care, this system will not change and will not work,” Dame Judith said. She also called on the industry to adopt less “adversarial practices” and recognise that project teams should be collaborating around delivery of a “collective purpose”.
The current system of individuals and firms taking out professional indemnity insurance isn’t working in the interest of projects’ clients, Dame Judith said and she called for more use of collective project insurance instead.
The new fire safety regime: the 'accountable person'
In the second of a series of articles, property risk consultants Tetra Consulting explore the role of the ‘accountable person’ in the government’s proposed new fire safety regime.
In this article second part of our series on the planned new fire safety regulations for multi-occupied residential buildings that are over 18 metres in height, we look at the proposal for a new duty holder. This ‘accountable person’ (AP) will have overall responsibility for the safety of people in the building once it is occupied.
The AP will be the entity or individual with control of the building. The government expects that, “in most cases”, it will be the building owner (ie the freeholder or head lessee) or a management company. The AP will be able to appoint professionals to help it carry out its duties, but it will not be allowed to delegate accountability. The AP may be an individual, partnership or corporate body but, if it is a legal entity rather than a person, its board will still have to name an individual as the AP.
As we saw in our last article, published in the December issue of the Technical Update, the new regime will have at its heart a “safety case”. The AP will be required to produce the safety case for the Building Safety Regulator, demonstrating that the fire and structural risks to occupants have been reduced to the lowest level that is reasonably practicable. The AP will have to ensure the building complies with any requirements that arise from the safety case and from the building safety certificate; review the safety case every five years (or more frequently if necessary); and have the competence to decide, in discussion with the regulator, about when and how to upgrade the precautions.
The AP must also ensure that a named building safety manager (BSM) is appointed for each building. Responsibility for ensuring that the BSM meets the competency requirements set by the Building Safety Regulator, and is registered with the regulator, also rests with the AP - as does ensuring that the BSM has access to the necessary funding and cooperation. We will examine the role of the BSM in our next article.
In addition, the AP must ensure that all buildings under its control are registered with the Building Safety Regulator. For new residential buildings, registration will be required before the regulator permits occupation. The government is proposing similar requirements for existing buildings, albeit with a transitional period.
The government is also considering placing a duty on the AP (and other dutyholders) to “promote” building safety and the safety of people in and around the building. This would require an AP to demonstrate that it is proactively managing (as a whole) the safety of their buildings, and “not simply taking a reactive approach or ticking boxes”.
It is important to note that the AP will not be able automatically to transfer its accountability under the building safety certificate to a third party, even if it is transferring its interest in the building itself. Instead, the third party would have to apply to the Building Safety Regulator to become the AP. If the regulator agrees that the third party meets the registration requirements, the regulator will transfer the certificate to the new AP, which then becomes additionally responsible for any liabilities of the previous AP that relate to the building.
In the next article, Tetra Consulting will take a closer look at the role of the building safety manager.
Legal update
When has a service charge demand been properly served? Mark Loveday looks at a recent case that clarifies an important point of practice
The recent case of 38/41 CHG Residents Co Ltd v Hyslop [2020] UK UT 0021 (LC) was heard in the Upper Tribunal (Lands Chamber) on 16 January 2020. The tribunal heard that the lease of a flat stated that “For the purpose of service of all notices … the provisions … contained in Section 196 of the Law of Property Act 1925 … shall be deemed to be incorporated herein”.
In following this lease provision, the landlord asked his agents to serve service charge demands. The agents provided a statement saying that one of their directors had printed out (i) a cover letter to the tenant (ii) demands for payment and (iii) a tenant’s statement. He produced two photographs showing the agent holding an envelope addressed to the tenant next to the letterbox.
However, the tenant contended that none of the demands were ever “issued”. The First-tier Tribunal found that the agent had not been able to prove “with any certainty” the tenant “received” the demands.
What was the decision based on?
On appeal, the Upper Tribunal decided the landlord had properly served the demand. Under s.196(3) of the 1925 Act, a notice “shall be sufficiently served if it is left at the last-known place of abode or business in the United Kingdom of the lessee…”. The test was therefore not whether the notice was “received” by the tenant, but whether it was “left” for her.
The F-tT had also applied the wrong standard of proof. It only had to be satisfied the demands were left at the premises on a balance of probabilities. The Upper Tribunal concluded that “the evidence is perfectly clear – sufficient to tip the balance of probabilities and more – that the appellant delivered to the respondent’s place of abode – as section 196 of the Law of Property Act 1925 requires – a demand for the outstanding service charges”.
Why is this case helpful?
Although this case does not lay down any new legal principles, it is of considerable practical help to managing agents. It is not uncommon for agents to be asked to confirm evidence of hand delivery of demands for payment. Leases commonly incorporate s.196 of the 1925 Act, and where they do so, the case confirms that the agent only has to prove the demands have been left for the tenant at their address, rather than proving the tenant actually received the demand. And photographic evidence of delivery will usually be enough.
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.
Talking points
Don't let your talented staff walk away
A recent Fixflo survey reveals a number of interesting findings about recruitment and retention in property management
Recruitment in the property industry has changed over the years. Right after the 2008 global financial crisis we saw redundancies and downsizing across all facets of the economy. Hiring managers were used to having five or more high calibre candidates on a shortlist.
Since the mid-2010s, market conditions have improved with many firms focussing again on growth and expansion. The hiring process has also evolved. The emphasis on culture fit has never been more dominant in interviews. Three interview meetings are now the norm with 30-minute presentations and assessment tasks becoming increasingly commonplace.
This surge in demand for talent also means that hiring managers no longer have a long shortlist to work with. Furthermore, candidates often seek multiple opportunities when job hunting to increase their chances of finding successful and suitable employment - a shortlisted candidate can become unavailable at any time before they sign the employment contract. One must wonder if these same challenges are also present in the leasehold and block management space.
With this in mind, an industry survey was conducted in 2019 that aimed to understand the main challenges and opportunities facing the leasehold sector. The findings were reported in The Fixflo Leasehold & Block Management Market Report 2019.
In total, 170 leasehold professionals responded to the survey with 34% identifying their seniority as ‘Director / Partner’ and 44% as ‘Manager’. Apart from compliance and profitability, talent acquisition and staff retention were identified as key challenges for the respondents.
Of those with management responsibilities (directors, partners and managers), only 16% of respondents expressed that ‘Retaining staff and training’ would not pose an increasing challenge for the leasehold sector; and 13% thought ‘Hiring and talent acquisition’ would not pose an increasing challenge for the sector.
However, the majority understood that apart from regulatory changes and profitability, talent is a pivotal area of business they cannot afford to neglect. The study also revealed that despite vast portfolio growth for over 95% of block management companies who have responded, profitability remained low. Losing experienced members of staff and not having suitable candidates to fill their shoes could put any business at risk.
The key to mitigating this risk is not to lose talent in the first place. Having an effective retention strategy is highly important. Those working in smaller firms might think that retention is unnecessary or even irrelevant to them - the fact is the exact opposite. The smaller your team, the more your business success depends on one employee. Retention methods do not have to be complex appraisal structures or hundreds of pages of employee manuals. Property management is a people business and retention is a people matter. An effective retention strategy is one which is shaped by the very people it intends to retain.
The 2019 survey also asked respondents to share their views on different challenges facing their professional career, with 65% identifying ‘training and professional development’ as a key challenge. Almost two-thirds (38%) said that they do not have the right technology. The same feedback was observed amongst property managers: 36% of those with property management as their main job role expressed that they ‘lack the right technology to do their job’.
In a recent roundtable discussion, it was discussed that the leasehold and block management business had largely stayed the same for the past 20 years. Most industries are adopting and creating new technologies, we must not get left behind. These are hard indicators of where property professionals might require more support from their companies.
The SWOT technique is widely used by those devising a business strategy; it is effective because it allows for self-reflection and an evaluation of one’s position in the wider market. Great employers and managers should also promote reflection and evaluation when devising their retention strategy, which should simply be one which looks to help their employee turn their personal challenges into new opportunities.
Riemy Wan is the Content Marketing Manager at Fixflo, a market-leading provider of repairs & maintenance management software solutions.
How legislation is holding back tech solutions
David Goldberg is an enthusiastic cheerleader for proptech and fintech. However, he believes efforts by property managers to enhance the customer experience are being thwarted by the unforeseen consequences of consumer legislation.
It’s all very well that we find new ways to innovate property management, provide smart homes, address the build to rent platforms and so on but 20% of the property market is leasehold. That’s around 4.5m homes (with 40% of that used for PRS) and a small number of BTR schemes, yet there are fundamental flaws in the system where existing technology could assist but is restricted by archaic legislation prohibiting its use.
When the government updated the Consumer Rights regulations in 2018, to prohibit charging customers more for using a credit card, there was a knock on effect for the residential block management sector. We are unable to pass the costs of taking credit card payments for service charges back to the consumer. I see this as a massive stumbling block to growth in our industry.
As we all know, the rules around service charges are such that monies are collected in trust and one needs to collect the exact amount of monies expended in running the building. So, if we can’t recover the cost of using credit cards, there would be a shortfall to the service charge and no means to recover it.
As a result, we find ourselves being left with two choices.
- We either accept that we, the managing agent, will absorb the cost of card payments which could run quite easily in to six figures at an average sized firm, never again to be recovered from our clients (and our fees certainly do not cover that overhead); or
- We only allow BACS or cheque payments and accept the fact that we will need to employ several staff to reconcile the receipts on a daily basis. How draconian is that!!
You may argue that either option will end up costing you the same, so what’s the issue? But that is short sighted. We can solve far more by removing this hurdle and engaging with technology to improve service, save money, allow reinvestment elsewhere and make the customer journey simpler!
For example, if we could take credit cards knowing we could pass the fees on to the consumer, the service charge would not lose out. That money could be reinvested into front line services such as better communication or hiring experts in increasingly complex arena of fire safety.
Perhaps more important, we could employ intelligent payment providers that would allow auto-reconciliation of payments (check out Stripe), meaning balances are updated instantaneously, given we will know exactly who is paying and what they are paying for. There would be no need for them to call us up to check we have received their payment, they could pay with ‘one click’ and we could avoid the need to be FCA regulated to accept Direct Debit payments as you could employ subscription services instead (check out GoCardless) and spread the annual service charge costs.
We would also have a far more effective way to drive customers to our often unused portals that, in turn, can deliver enhanced services. As we stand right now, what use is my portal other than reporting an issue or downloading a document? Boring. I’d rather invest the money I’ve saved on fees to buy-in value added services for my customers, so that they really enjoy living in a property managed by us.
When you consider that today’s consumers expect to be able to pay online, why is it that we are accepting a prohibitive framework and why are we are not lobbying the government to change the rules for residential service charges?
PropTech and FinTech solutions can solve so many of the problems we face but they are no good if the lease or legislation prevents us finding solutions. As an industry, it’s time we got together to solve these problems.
David Goldberg is MD of POD Management.
Topic of the month
Care in the community: how property managers can help combat loneliness
At Mainstay Residential, managing agents are helping residents get more involved in their communities. Here’s how they are doing it.
The UK is in the grips of a loneliness epidemic, and its impact is concerning – scientists found in a 2017 report that loneliness is as harmful as smoking 15 cigarettes per day.
The number of single households is on the rise, and due to increase by a quarter (1.7m) by 2039, according to government projections. Therefore, many working-age Britons spend a sizeable chunk of their time commuting, getting their heads down at work, and coming home in the evening to an empty house.
Slipping into this routine can see isolation quickly becoming the norm, with many people not realising how little social interaction they’re experiencing day-to-day for some time. Big cities tend to lack the tight-knit community feel often found in smaller towns and villages, making urban loneliness especially widespread in this day and age.
Future Steps
However, the way in which we inhabit our cities presents the UK with a unique opportunity to help eradicate the loneliness problem creeping into our society. The rise of initiatives such as build-to-rent and co-living is seeing ‘Generation Rent’ live in a more connected, sociable way, as developers create schemes with ample shared space and communal facilities.
It’s crucial, though, that once a developer has finished constructing a scheme, the notion of encouraging interaction isn’t forgotten – and Kate Magill, Associate Director for the North West at Mainstay Residential, believes it is the responsibility of a Managing Agent to pick up the mantle.
Kate manages 14 buildings across the region, including the Urban Splash-built Timber Wharf/MoHo/Burton Place portfolio in Manchester. Her team has also recently been instructed on Downtown, an upmarket scheme in Salford.
“As property managers, we’re finding more and more that we’re having to adopt a ‘lifestyle management’ approach – and there’s so much we’re doing within that which is fundamental to stopping people experiencing loneliness. There’s a young community in Downtown, and a lot of students,” Kate explains. “In particular, we’ve seen a large number of international students decide to call Downtown home, many of whom don’t speak English as a first language.”
“These demographics – young people, students, people possibly living away from home for the first time, people who aren’t native English speakers – can be particularly susceptible to feeling lonely, as they’re trying to find their feet in a new city. That’s why we as property managers need to ensure we’re aware and on hand to help.”
Historically, apartment blocks have looked to welcome and integrate residents by putting on occasional welcome drinks. However, Kate believes that in the current climate, it’s important to think bigger – and more inclusively. “It’s about offering residents a balance of practical solutions and interesting events which will actually resonate with them,” she explains. “For example, many of Downtown’s residents speak Mandarin – so we’ve understood that there might be a language barrier and have updated all our signage and documents to include both English and Mandarin.
“Feeling ‘othered’ can be a big contributor to loneliness and isolation, so we want to be sure that anybody living in Downtown feels welcome and safe. We always encourage our site teams to speak to residents and get to know them.
“We also do inductions in foreign languages and make sure that we’re equipping our residents with the practical tools they’ll need to feel comfortable and confident in their new homes – so our team might teach new tenants how to use their boilers or their dishwashers. We’ll also be holding cooking classes and teaching them how to be savvy with money. All of these little things help to ensure residents are looking after themselves mentally, which will in turn help them feel confident and secure to begin forming relationships with others.
“The other side of the coin is then providing residents with fun, relaxed events that they can socialise at. We hold regular mixers at the local pub over on Timber Wharf, and at Downtown once phase two completes we’ll have the facilities to hold things like wellness classes and yoga sessions. There will be lots of shared space like a gym and a business hub once that all comes together, which means we’ll be able to boost our resident engagement strategy even more.”
Building communities
Beyond the buildings they manage, Mainstay also looks to integrate occupiers into the wider cities they’re living in, with the team staying up to speed with everything happening locally and making tailored recommendations of things to do and see for residents. Kate and her colleagues have also in the past arranged tours with Manchester City Council so that Mainstay residents can get to know the city.
“It’s not just about the building, it’s about the community,” Kate concludes. “A young person could live in the plushest apartment block possible but still feel cut off from other people that live there and at odds with the city it’s located in.
“If we want to help curb Britain’s rising loneliness problem, it’s crucial that we take a ‘human-first’, compassionate approach, and curate living spaces which are accessible, inclusive, friendly and safe.”
Defects Database
How safe are your electric gates?
Sean Cassidy takes a closer look at powered gates and provides some simple testing tips.
Electric gates are potentially dangerous. They must be kept in good working order to ensure they don’t pose a risk to residents, their guests or members of the public. Component parts can wear and fail, sometimes catastrophically, leading to injuries and even fatalities.
The most common question asked about gates, is whether or not they need servicing on a regular basis. Property managers are responsible for the wellbeing of residents and the public. Fall foul of health & safety laws and you could be facing a negligence claim. So the answer to the question is ‘yes’.
Gates should be regularly serviced by a suitably qualified engineer. A minimum of twice a year is recommended but depending on use, some gates may need servicing more often. Information on servicing is provided for CE marked gates in the instruction manual.
Gates must comply with Machinery Directive 2006/42/EC. This will ensure essential health and safety requirements are met. The first thing to look for is that the gate is CE marked. If this is the case you should try to obtain the following information:
• Declaration of Conformity
• A full instruction manual
• A technical file.
This information should be issued to a suitably qualified engineer to check that the gate is free from any alterations which may invalidate the documentation. Gates which don’t comply require an urgent risk assessment.
In addition to regular maintenance there are some simple monthly checks that block managers can undertake to ensure gates are operating safely between service visits. For both sliding and swing gates:
• Check smooth operation of the gate
• Check that the photocells are clean and free from plants
• Check the CE mark is fixed to the gate and still clearly legible
Sean Cassidy is director of Future Security Solutions
What’s new on the Resource Hub?
Case law
Eldersan Ltd v Covic [2020] UKUT 3 (LC)
A landlord under a residential long lease who seeks to forfeit the lease because of a breach of covenant must comply with the law, which requires that either the breach is admitted by the tenant or that it is proved. This case turns on a determination of the FTT, which went to appeal.
Lexham House RTM Company Ltd v European Investments & Development (Properties) Ltd [2019] UKUT 390 (LC)
In this recent case, the Upper Tribunal grappled with the issue of landlords who have little or no input in the overall management of the building.
Risk Management
Health & Safety made simple
New guidance from the HSE provides useful information to help you manage the risks in your business in a proportionate way.
Running your business
The right to parental bereavement leave explained
The right to parental bereavement leave is due to come into force on 6 April 2020. What do organisations need to know about how to administer the new right and how to prepare for its introduction? This comprehensive set of resources includes a parental bereavement leave policy, and helps answer a range of questions.
