Technical Update - July 2018 - TPI Update

The month in Brief

A year on from last year’s devastating fire, Grenfell Tower continues to cast a long shadow across the property industry. In this month’s issue we report on a number of initiatives that have resulted from the ongoing inquiry including consultations on banning combustible cladding, a call for sprinkler systems in Scottish social housing, the promised Social Housing Green Paper and a 56% rise in fire safety work for contractors.

In other news, the government has published a range of consumer guides for tenants and leaseholders with the aim of making the sector more transparent; the Supreme Court has ruled in the well-publicised Pimlico Plumbers case; and more than 100 organisations have signed up to the Chartered Institute of Housing’s pledge to tackle domestic violence. Our regular Legal Update looks at recent must-read cases and this month’s Talking Points look at the wider implications of the Corvan case and make the argument for retaining ground rents for residential blocks.

As always, if you have a comment or an opinion to share, why not join the info@irpm.org.uk with title "IRPM Update Idea - FAO Marketing"

IRPM News
Putting professionalism first

In the press
Government announces private sector task force and cladding consultation | High Court go-ahead for Judicial Review of Right to Rent | Government issues HMO and property licensing guidance | Mass sign-up for CIH pledge on domestic violence | New consumer guides for leasehold

What’s new in HR?
Making the business case for diversity and inclusion at work | When is it too hot to work? | Supreme Court quashes Pimlico Plumbers appeal | Fitness at work

Social Housing
Government investment boost for social housing | Social Housing Green Paper expected this summer | Research reveals fire issues in 70% of social housing towers

Fire safety
Contractors see 56% rise in fire safety work

Health and safety
Government to review carbon monoxide alarms | Property manager fined after inadequate survey | New electrical testing campaign

News from Scotland and Wales
New deal to deliver 1000 new affordable homes for Scotland | Sprinkler systems to protect Scottish homes against fire | Welsh Government launches Housing First panel | Scottish government calls for VAT-exemption on cladding removal | Calls to ban combustible cladding on Welsh high rises

PRS and B2R
Older tenants outnumber ‘generation rent’ | Green light for homes on former Boddingtons site | Is the German housing model coming our way? | Developers seek investment partnership to enter build to rent market | Labour calls for ‘fairer deal’ for renters | Want easier property management? Then rent to families… | Government publishes new HMOs guidance for landlords | Government to review selective licensing | Developer boosts build-to-rent pipeline | Is ‘rent –to-buy’ the next big idea?

Legislation
Longer tenancy plans to give renters more security | Royal Assent for Regulation of Registered Social Landlords (Wales) Act 2018 | Welsh Government introduces letting fees ban Bill

Legal Update
Sanderson v Cambridge Park court Residents Association Ltd | This month’s must-read cases | Tanfield triumphs at ERMAs

Talking points
Why a common sense approach to ground rents is now critical | Don’t fall foul of Corvan

Topic of the month - Open data

Events
This month’s seminars, conferences and CPD events

IRPM News

Putting professionalism first

Andrew Bulmer unpicks the real meaning of being a professional

I am lucky enough to meet some great industry leaders. Within the last couple of weeks, one told me his firm changed the word leaseholder to customer 3 years ago; staff churn is down, and business is growing. Another insists on all his managers being well qualified, because he charges at least twice what the competition do, and he wins the business on quality. His business is growing strongly too. Competing and winning not on price, but on the ability to give your clients and customers confidence in your professionalism.

So what do I mean by professionalism? We all sort of know what that means, don’t we? We’re all IRPM qualified professionals, after all. Yet nothing stays the same for ever and what was acceptable and appropriate before won’t necessarily carry us into the future. Government will make sure of that when it introduces mandatory qualifications for managers.

IRPM is leading the way in redefining of what it is to be a professional in residential property management. You are going to be hearing more about this soon, but here are the headlines. Having strong technical knowledge is the bedrock, of course. That is essential. But professionalism is more than that, surely? It is about your customer having trust in you to deliver a good service, safely, transparently and fairly, and to place their interests high on your priority list.

Working with our members and leading firms, IRPM has captured this culture change in “The Four Elements” of property professionalism:

Technical competence. The bedrock of any profession. Evidenced not just by exams, but by ongoing CPD (the biggest of big hints here: please, please get yours recorded if you haven’t already and tell your colleagues also, because Government is looking at CPD compliance as part of assessing competence…)

Safety. Post-Grenfell, I need say no more. But also, personal safety and well-being of your customers and you too.

Customer focus. With Government set to increase consumer power, new legislation coming and your competitors embracing your customer, those who do not meet customer need will decline or perish entirely.

Ethics and behaviours. Doing what you say, when you say, transparently and without hidden surprises or conflicts of interests, is at the heart of what it is to be professional.

Professionalism breeds trust. Trust wins better business. Better business makes for a better career and money in your pocket.

Over the coming weeks and months, I will unpack these Four Elements and reveal more about how the IRPM is working with members to help you raise standards in the sectors we work in. You can get a head start at the Regional Seminars this autumn (see Events for dates). In addition to the time-honoured legal updates and “need-to-knows”, we need you to be part of this project. IRPM is your professional body, so join with us at the Regionals, have your say and catch up with your peers when we meet up in your area.

Andrew Bulmer is CEO of IRPM

In the press

Government announces private sector task force and cladding consultation

As the government admitted there are more than twice as many private blocks with potentially dangerous cladding than estimated in May, housing secretary James Brokenshire announced a new task force for remediation in the private sector.

Inside Housing reported that the task force will be chaired by ministers and will include the Local Government Association, National Fire Chiefs Council, London Councils, local authorities and industry representatives. A new inspection team was also announced, to be funded by £1m of government funding to support individual councils to ensure building owners take action on cladding.

Earlier in June a consultation on banning the use of combustible materials on the external walls of high-rise residential buildings which are 18 metres or over was published.

The government wants to ensure that there is no doubt about which materials can be used on high-rise residential buildings. The consultation invites views on proposals to revise the building regulations to ban the use of combustible materials in the inner leaf, insulation and cladding that are used in external wall systems on these buildings.

Residents, industry and other interested parties will now be able to have their say on proposals affecting the safety of homes. The government is legally required to consult on substantive changes to the buildings regulations before any change in the law and this consultation, which can be downloaded at here, will end on 14 August 2018.

High Court go-ahead for Judicial Review of Right to Rent

The High Court has agreed to allow a judicial review of the government’s Right to Rent policy. Right to Rent is a flagship part of the ‘hostile environment’ strategy for illegal immigrants introduced by Prime Minister Theresa May when Home Secretary.

Letting Agent Today reported in June that the Residential Landlords Association (RLA) had supported an application by the Joint Council for the Welfare of Immigrants in the High Court for a judicial review of the policy. Both organisations argued that the policy discriminated against foreign nationals, especially those, such as the Windrush generation, who cannot easily prove their right to remain in the UK.

David Smith, policy director for the RLA, said: “Landlords will welcome the High Court decision to allow a judicial review of the Right to Rent policy which has put them in the impossible position of acting as untrained Border Police trying to ascertain who does and who does not have the right to be in the country. This has created difficulties for many legitimate tenants as landlords are forced to play safe and only rent to those with a UK passport"

Government issues HMO and property licensing guidance

The government has issued non-statutory guidance on the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 (S.I. 2018/221) and the Licensing of Houses in Multiple Occupation (Mandatory Conditions of Licences (England) Regulations 2018 (S.I. 2018/616).

The first piece of guidance extends the scope of mandatory licensing (Part 2, Housing Act 2004) to include HMOs which are less than three storeys high and the second introduces new national minimum sleeping room sizes and waste disposal provision requirements. This guidance seeks to assist authorities in identifying HMOs which will be subject to the new regime and how to identify properties which may violate the minimum room size condition.

The guidance can be downloaded here.

Mass sign-up to CIH pledge on domestic violence

A hundred organisations have already signed up to the Chartered Institute of Housing’s (CIH) pledge to tackle domestic violence covered in the last issue of Technical Update, which called on social landlords to support four pledges to tackle domestic violence in its ‘Make a Stand’ campaign.

The pledges are:
•    To put in place and embed a policy to support residents who are experiencing domestic abuse.
•    To make information about national and local domestic abuse support services available on your website, and in other places which are easily accessible to residents and staff.
•    To put in place a HR policy and procedure on domestic abuse, or to incorporate this into an existing policy, to support members of staff who are experiencing domestic abuse.
•    To appoint a ‘champion’ in your organisation to own the activity you are doing to support people experiencing domestic abuse.

Commenting on the response, CIH president, Alison Inman, said: “To have done this across a quarter of social housing in the UK in our first two weeks is phenomenal and a testament to the determination of the housing sector to do more on this issue.”

What’s new in HR?

Making the business case for diversity and inclusion at work

While there has been encouraging progress in workplace diversity and inclusion in recent years, the pace of change is slow, despite the clear and compelling moral case for equal opportunities and for people to be treated fairly. Supporting inclusion means more than simply diverse hiring practices and people management must go beyond policy, to ensure everyone in the workforce is supported and valued.

In a new research report, the Chartered Institute of Personnel Development (CIPD) considers the barriers that continue to prop up workplace inequality and looks at the ways in which organisations can dismantle these to make work an equal business. The report offers guidance, implications and key actions for HR and business leaders to drive meaningful change.

To find out more click here

When is it too hot to work?

During working hours the temperature in indoor workplaces, such as an office, must be reasonable. There’s no law for maximum working temperature, or when it’s too hot to work.

However, the HSE explains that employers must stick to health and safety at work law, including:
• keeping the temperature at a comfortable level, sometimes known as ‘thermal comfort’
• providing clean and fresh air

When deciding if the temperature is comfortable, rather than simply measuring room temperature, employers should consider the number of employees complaining of discomfort.

Employees should talk to their employer if the workplace temperature isn’t comfortable.

Supreme Court quashes Pimlico Plumbers appeal

The Supreme Court has unanimously held that a self-employed plumber qualified as a worker in an appeal lodged by Pimlico Plumbers. In Pimlico Plumbers Ltd and another v Smith, heard in June, under the relevant statutory provisions Mr Smith is entitled to the rights of a worker.

The Supreme Court said that it was "conceptually legitimate as well as convenient" to treat the three original findings of the employment tribunal that ‘self-employed’ plumber Mr Smith was a worker within the meaning of s.230(3) of the Employment Rights Act 1996. The Court said this was because reg.2(1) of the Working Time Regulations 1998 defines "worker" in identical terms to s.230(3). The Court added that, while s.83(2)(a) of the Equality Act defines "employment" in "terms different from those descriptive of the concept of a "worker", case law has suggested that the meaning is essentially the same.

This is an important judgment for all employers that engage "self-employed" contractors or operate within the gig economy. The Supreme Court has confirmed that regardless of the contractual label applied, the courts will look behind the written documentation to ascertain the true nature of the working arrangement and, most crucially, whether or not there is an obligation of personal performance.

Fitness at work

Did you know poor fitness can cost employers around £522 every year for each employee? To help employers cut these costs and take advantage of the significant tax savings, the government has developed guidance and information on:

•    Fitness-at-work
•    Sporting and recreational facilities – what is exempt?
•    Payrolling benefits and expenses through y our payroll
•    Reporting and paying Expenses and Benefits

If you use salary sacrifice arrangements with the above, they are all taxable. More information is available here.

Social housing

Government investment boost for social housing

A multi-billion pound boost to social housing across England was confirmed by Housing Secretary James Brokenshire in June.

Around 23,000 new affordable homes will be delivered through a £1.67 billion government investment deal. This will include at least 12,500 social rent homes in high cost areas in a move to support families struggling to pay their rent.

This is part of the government’s £9 billion investment in affordable homes, £1.67 billion of which was announced in March 2018 for London. This latest funding will deliver homes across the rest of the country.

The Communities Secretary also heralded a new generation of council housing by inviting local authorities to bid for a share of £1 billion extra borrowing to build much-needed homes. This £1 billion borrowing cap raise will be split equally between London and the rest of England.

Social Housing Green Paper expected this summer

Housing secretary James Brokenshire announced in June that the government’s Social Housing Green Paper, promised last year by Sajid Javid, will be published on 24 July.

The aim of the Green Paper according to the Minister, is that people living in social housing “... are not only safe but they feel the state understands their lives and works for them. Which is why – as well as strengthening building and fire safety – we’ll be publishing a Social Housing Green Paper by recess.”

The government had previously promised publication in the spring, a promise it restated after Dominic Raab replaced Alok Sharma as housing minister in January.

Research reveals fire issues in 70% of social housing towers

An Inside Housing survey of more than 1,500 fire risk assessments (FRAs) recently revealed that more than 70% of social housing tower blocks have fire safety issues, including inappropriate fire doors in seven in every 10 blocks.

FRAs for 1,584 tower blocks in England, 40% of the UK’s total social stock, were analysed for the survey, revealing broken fire doors, holes in walls that breach fire compartmentation and missing fire safety information for residents across the country. It also showed that many assessments were being carried out less frequently than every year and 54% of towers have not been assessed since Grenfell.

Fire safety

Contractors see 56% rise in fire safety work

In the year since the Grenfell Tower fire, contractors have seen a 56% rise in fire safety work, compared to the previous 12 months, according to data collected by consultancy Tussell (source: Inside Housing).

Local authorities are mainly responsible for the increase, many of which have spent the last 12 months removing dangerous cladding from tower blocks. There was a 100% increase in the number of local government buyers publishing fire safety tenders, up from 49 to 98 and a 39% increase in the number of housing associations seeking contractors to do fire safety work, from 28 to 39.

Gus Tugendhat, founder of Tussell, said: “It is heartening to see that Grenfell has prompted long overdue investment in fire safety across the wider public sector – particularly in local government.”

Issues around fire safety are the responsibility of building managers said Brian Robinson, president of the Fire Sector Federation, who commented “In my view, if the house or the building was being managed properly then those things would be picked up by the managing agency or the owners and should be put straight.”

Health & safety

Government to review carbon monoxide alarms

Housing Minister Dominic Raab has announced a government review into the fitting of carbon monoxide alarms in homes across England, (source: Planning and Building Control Today).

The review will examine existing regulations including consideration of a blanket requirement to install alarms for all methods of heating, as well as the current requirement for alarms in homes with solid fuel appliances. The review will also consider whether the cost of alarms is affecting installation rates and will look at new research into the number of carbon monoxide poisonings. Further details will be announced later this year.

Property manager fined after inadequate survey

A property management consultancy and an asbestos surveying company have been fined after an inadequate refurbishment and demolition survey was provided for a major refurbishment project including partial demolition.

Dudley Magistrates’ Court heard how the survey undertaken by Home Inspectors Southern Limited failed to identify asbestos cement and asbestos insulating board (AIB) containing Chrysotile and Amosite asbestos.

An investigation by the Health and Safety Executive (HSE) found that the surveyor had no training in asbestos surveying or previous work experience with a suitably qualified person or accredited organisation. Home Inspectors Southern Limited were not asked for any information by Vital Property Solutions Limited to demonstrate their skills, knowledge, experience and training relating to asbestos surveying.

Vital Property Solutions Limited pleaded guilty to breaching Section 3 (1) of the Health and Safety at Work Act 1974. The company has been fined £8,400 and ordered to pay costs of £929.67.
Home Inspectors Southern Limited also pleaded guilty to breaching Section 3 (1) and the company was fined £4,800 and ordered to pay costs of £929.67.

Speaking after the hearing, HSE inspector Edward Fryer said: “Asbestos surveyors have a duty of care to those persons who use the information they provide. The survey missed a significant amount of asbestos contaminated materials (ACM’s) thus increasing the risk to workers, who would be disturbing the fabric of the buildings during the refurbishment/demolition project.

New electrical testing campaign

Industry experts have joined forces to launch a campaign urging policy makers to create legislation on appliance testing in rental properties (source: Landlord Today).

A year on from the Grenfell Tower fire, electrical testing equipment expert Seaward, backed by Grahame Morris MP, is pressing for changes in the law to make rented homes safer. Seaward wants to see a change in the law to require landlords in England to carry out regular electrical testing on the appliances in their rental properties. This is already mandatory in Scotland and Wales.

Grahame Morris, a Labour politician, has sponsored an Early Day Motion calling for the topic to be debated in Parliament and support for the national campaign is growing. “Regular PAT testing can ensure that electrical faults are identified, helping to prevent potentially lethal fires. It’s a quick, easy and affordable process that can save lives and protect property,” he said.

North of the border, SELECT, whose member companies account for over 90% of all electrical installation work carried out in Scotland, is also campaigning for more stringent safety enforcement laws to bring all rented housing in Scotland up to the required standards.

News from Scotland and Wales

New deal to deliver 1000 new affordable homes for Scotland

One of the UK’s largest housing associations has struck a £150m deal with the Scottish Government to invest in mid-market rent properties throughout Scotland.

A loan of £47.5 million, which is one of the largest long-term loans provided to an affordable housing fund by the Scottish Government, will be given to PfP Capital, which is part of the regeneration group Places for People (PfP). The fund will be used to build an estimated 1000 mid-market rent homes across the country. Read more on this here.

Sprinkler systems to protect Scottish homes against fire

Legislation to make sprinkler systems compulsory in new social housing is to go ahead in Scotland. Housing Minister Kevin Stewart confirmed in June that the Scottish Government will take forward David Stewart MSP’s proposal for a Members’ Bill to make it a legal requirement for all future new build social housing properties to be fitted with sprinkler systems. Currently all new high-rise domestic buildings, whether private or social, with a floor over ‎18 metres must have automatic fire suppression systems fitted.

Expanding the use of sprinkler systems in Houses in Multiple Occupancies (HMOs) that are used as care facilities, or house more than 10 people, is also one of the recommendations that will be consulted on as a result of work done by the Ministerial Working Group on Building and Fire Safety since it was established last June.

Welsh Government launches Housing First panel

Earlier this year, the Welsh Government announced its intention to bring forward a national Housing First programme. Taking this forward, Welsh First Minister Carwyn Jones has launched a “task and finish group” to oversee the delivery of Housing First in Wales. The focus of the group will be on promoting cross-departmental working to tackle the problem of youth homelessness and advise on implementing Housing First schemes in Wales.

Housing First is an approach that offers permanent, affordable housing as quickly as possible for individuals and families experiencing homelessness, and then provides the supportive services and connections to the community-based supports that people need.

Scottish Government calls for VAT-exemption on cladding removal

The Scottish Government has called on UK ministers to waive VAT for companies removing combustible cladding from their buildings.

The UK government has said it will cover the cost of removing cladding from social housing blocks that has failed a large scale fire safety test but to-date this does not include private blocks.

Scottish Housing Minister Kevin Stewart was quoted in Inside Housing in June, saying: “The Grenfell Tower fire was a tragedy and we have to learn lessons on how to better protect people in their own homes. We are continuing to review our building regulations to ensure that the appropriate fire protections are in place, but to maintain public faith the UK government should not be in a position to make money on the back of repairs to keep people safe. “The exemption of VAT on repair and renovation works is an issue that the Scottish Government has raised previously with HM Treasury and which has not yet been resolved."

Welsh Government to ban combustible cladding on high rises

In response to Dame Judith Hackett’s final report in her review of the building regulations and fire safety, published in May, the Welsh Government has announced its intention to ban the use of combustible materials on residential high rises in Wales.

Welsh Housing and Regeneration Minister Rebecca Evans, said in June that the ban would be subject “to a legally required consultation into this matter”. Housing Minister Dominic Raab has also committed the UK government to a similar ban after a consultation.

PRS and B2R

Older tenants outnumber ‘generation rent’

Despite press reports on the urgency of providing housing for ‘generation rent’, recent research from PRS and Build to Rent (BTR) specialist PRSim, reveals that young people aged 18-24 only comprise 22% of renters.

PRSim’s latest annual tenant survey, shows a near-even split between four key life stages, highlighting the need for investors and developers to be more flexible in their approach to tenants and to question any preconceived ideas they may have about their age and aspirations.

The survey, which was conducted in March 2018 among 3,700 tenants across the UK, identified three core principles that PRSim believes agents, landlords and developers should adopt and how these can be adapted to different age groups, to make the tenant’s renting experience more successful and the decision making process for Build to Rent developers and investors easier.

Stakeholders are urged to:
•    Challenge perceptions of the rental landscape and what tenants can expect it to include;
•    Tailor and target new building initiatives to ensure that new ideas resonate with the different lifestyles of tenants; and
•    Foster strong dialogue with tenants to support success and ensure tenants’ expectations are met.

While many providers may be guilty of assuming that renting is only for the young, the research clearly shows that there is growing demand from tenants of all ages and, increasingly, from older renters who are reconciled - and happy - to rent in the longer term.

Green light for homes on former Boddingtons site

Prosperity Capital Partners have successfully secured planning for a £175m landmark build-to-rent scheme in the heart of Manchester.

The 556-home mixed-use development, named Old Brewery Gardens, is part of a residential-led regeneration on the site of the famous Boddingtons Brewery, a regional landmark opposite the Manchester Arena. Out of the 556 homes, 375 will be built specifically for rent and the remaining 181 for sale. The development designed by London-based Assael Architecture will also include 40,000 sq. ft. of retail and commercial space that will drive further investment and job creation into Manchester’s thriving economy, as well as creating a new retail district for the wider community.

Prosperity Capital Partners has 1,700 student accommodation and BTR units either completed or in the pipeline.

Is the German housing model coming our way?

An Englishman’s home may not be his castle for much longer, according to new research from Direct Line Business. More than 70% of current renters in the UK have no plans to purchase a property of their own, indicating that Britain is moving towards a German housing model with a greater percentage of the population renting.

A fifth of those not looking to buy said they don’t want the financial commitment that comes with owning a home, while 9% want to be free to travel and 8% don’t want to be tied to a local area. More than 22% are put off owning by the cost of maintaining a property. The analysis suggests that the adage “an Englishman’s home is his castle” may be set to change, with future generations more likely to live in properties owned by other people.

The average price paid by first-time buyers in 2017 was £207,693, more than 50 % higher than five years previously when the same property cost on average £138,663. This is an increase of nearly £70,000, or £1,150 every month.

Despite prices rising by more than £12,000 in the past year, London is the region people expect to spend the least amount of time renting in before moving onto the property ladder. Scotland currently has the highest proportion of renters and the West Midlands has the lowest.

Developers seek investment partnership to enter Build to Rent market

Leading UK developer, Ballymore Group and Oxley Holdings are seeking an investment partner to work with them in the Build to Rent market.

The investment is sought as Ballymore announces its strategic commitment to large-scale Build to Rent developments which will be initiated at a new development at Deanston Wharf, London. Deanston Wharf is currently being developed in a 50/50 Joint Venture between Ballymore and Oxley.

The scheme will be part of the major Royal Wharf regeneration project, a new neighbourhood for East London, jointly developed by Ballymore Group and Oxley Holdings. Forward funding is being sought for 272 units, designed over two buildings, with construction set to begin in early 2019. The properties will be built solely for rental purpose and will offer high quality accommodation at a range of sizes with river-facing views.

Labour calls for ‘fairer deal’ for renters

Tenant deposits should be capped at a maximum of three weeks rather than the six weeks rent proposed as part of the Tenant Fees Bill introduced into Parliament in May, according to the Labour party.

The six-week cap was announced by chancellor Philip Hammond in his Autumn Statement last November. However, according to a report in Landlord Today, Labour believes even with the cap suggested by the Bill, security deposits cause a significant affordability problem for tenants and they should be cut in half.

Labour claims their plans would save tenants £575 on average compared to the government’s proposal of £1,150, based on a limit of six weeks’ rent.

Want easier property management? Then let to families...

Families take up the least amount of property management time when compared to other types of tenants, according to the latest quarterly landlord research panel from the National Landlords Association. Landlord Today reports that the NLA’s findings show that landlords who rent to families and young couples spend on average one full working day a week - eight hours - on property management.

The evidence was drawn from more than 1,000 responses to the survey which asked landlords to estimate how much time they spent on property management, including dealing with tenant queries, property maintenance requests, and general business administration.

The findings also show that buy-to-let investors with mortgages spend on average three and a half additional hours each week on property management compared to those who are mortgage-free; and those with energy efficient properties (EPC rating of D or above) spend two hours less per week on property management.

Government publishes new HMOs guidance

New guidance for landlords to further protect tenants from poor living conditions has been published by the Ministry of Housing, Communities and Local Government (MHCLG). From 1 October 2018, any landlord who lets a property to five or more people – from two or more separate households – must be licensed by their local housing authority.

This is expected to affect up to 160,000 HMOs and will allow councils take action against landlords renting out substandard and overcrowded homes. New rules will also come into force setting minimum size requirements for bedrooms in HMOs to prevent overcrowding.

Read the guidance here.

Government to review selective licensing

The government has announced a review by independent commissioners into selective licensing in the private rental sector to find out how well it is working. In parts of the country which use selective licensing, landlords must apply for a licence if they want to rent out a property, allowing local authorities to check the credentials of landlords and set criteria for management and health & safety standards. The review’s findings will be reported in spring 2019 and there will be an update on progress in autumn this year.

Developer boosts build-to-rent pipeline

One of the earliest entrants to the build-to-rent sector has expanded its partnership with a major housebuilder in order to deliver more homes in this fast growing sector, reports Letting Agent Today.

Sigma Capital has extended a strategic partnership with Countryside Properties which dates December 2014 when Countryside agreed to build 927 BTR homes for Sigma. In early 2016 this was extended to add a further 900 homes. Now the two companies have signed a framework agreement targeting the delivery of a further 5,000 private rented sector homes over the next three years, over and above those already built or in process.

During the year to 30 September 2017, Countryside delivered 721 BTR properties for Sigma across the North West of England and the West Midlands.

Is ‘rent-to buy’ the next big idea?

Conservative MP Gary Streeter met with Prime Minister Theresa May in June, to urge her to promote the Rentplus rent- to-buy initiative in order to help combat the UK’s housing crisis.

Streeter is a known supporter of Rentplus, a concept which was pioneered in his Plymouth constituency. The Independent Online, reporting on the meeting, explains that the Rentplus model provides aspiring home owners with privately-funded affordable rent-to-buy housing. Tenants have fixed term renewable tenancies for five, 10, 15 or 20 years at an affordable intermediate rent set at 80% of market rent, after which they have the opportunity to buy their own home. The rent they pay includes service charges and there are no separate maintenance or property insurance costs.

Rentplus was formed in 2012 and says it is on course to deliver 5,000 affordable new homes by 2020 and has contracts to build in Cambridgeshire, Gloucestershire, Oxfordshire, Essex, Suffolk, Northants, Devon, Somerset, West Devon, the South Hams, Sedgemoor, Plymouth and Bicester. Streeter is reported by The Independent to be suggesting that this model could be applied on a wider basis.

Legislation

Longer tenancy plans to give renters more security

In plans published on 2 July, Housing Secretary James Brokenshire, set out proposals for the introduction of a minimum 3-year tenancy term, with a 6-month break clause, to help renters put down roots, and give landlords longer term financial security.

Under the proposed longer term agreement, tenants would be able to leave before the end of the minimum term, but would have greater protection if they wanted to stay in a property for an extended period of time.

The government is now seeking views on the proposals in an eight-week consultation which can be downloaded here.

Royal Assent for Regulation of Registered Social Landlords (Wales) Act 2018

The Regulation of Registered Social Landlords (Wales) Act 2018 amends the way in which Registered Social Landlords are regulated in Wales.

The Act removes the requirement for the Welsh Ministers to consent to a change in the name of the RSL or to consent to an amalgamation or dissolution and replaces it with a duty to notify the Ministers of any such change (ss.3, 4, 2018 Act, amending Sch.1, Housing Act 1996). Similarly, the existing requirement for an RSL to obtain the consent of the Welsh Ministers before disposing of land (s.9, Housing Act 1996), is replaced by a requirement to notify the Welsh Ministers (s.14, 2018 Act).

New provisions are also introduced limiting local authority involvement in RSLs, including by limiting the number of board members that a local authority can nominate to serve on an RSL board (setting the cap at 24% of the members) (s.16 and Sch.1, 2018 Act, inserting Chapter 1A, Part 1, Housing Act 1996). The 2018 Act will come into force on a date to be appointed by the Welsh Ministers (s.19).

Welsh Government introduces letting fees ban bill

The Welsh Government has introduced a bill proposing a ban on tenant fees in the private rented sector. The Renting Homes (Fees etc) (Wales) Bill will outlaw, among other things, the practice of landlords and letting agents charging for signing contracts, renewing tenancies and receiving an inventory. The government is proposing that tenants who comply with their tenancy agreement will only be required to pay rent plus security and holding deposits and holding deposits paid to reserve properties are capped at one week’s rent.

However, David Cox, chief executive of ARLA Propertymark was quoted in Inside Housing in June, saying: “We do not believe the Bill will achieve its aims, as our own research last year demonstrated that tenants will end up worse off and banning fees will not result in a more affordable private rented sector.

“We’ll be liaising with the Welsh Government to ensure they understand the consequences of what ban will entail and how it will negatively impact all those involved in the private rented sector,” he said.

Legal Update

Sanderson v Cambridge Park Court Residents Association Ltd

Mark Loveday takes a closer look at a recent case which highlights the issues around estoppel by convention

The decision by HHJ Hodge QC in Sanderson v Cambridge Park Court Residents Association Ltd [2018] UKUT 0182(LC), relates to communal heating and hot water charges levied by a landlord in relation to a flat in Twickenham. The Upper Tribunal decided the tenant did not have to pay the charges for the period after the flat was disconnected from the communal system.

The facts of the case
The flat was situated in a block served by an oil-fired communal heating and hot water system. The tenant’s lease included service charge provisions, but these did not expressly require the tenant to contribute anything to the cost of heating and hot water. Nevertheless, since at least 1994 the landlord had included these costs in the service charge demands, and the leaseholder had paid them without protest.

From about 2008, the hot water supply to the flat was not of reasonable standard and the tenant complained. In March 2014, the tenant installed his own gas-fired boiler in the flat and the property was disconnected from the communal system. The landlord continued to demand contributions to the communal system, which amounted to £5,008 for the 2014/15, 2015/16 and 2016/17 service charge years. The tenant’s challenge was rejected by the First-tier Tribunal.

Decision
The Upper Tribunal overturned the F-tT decision and allowed the tenant’s appeal. Despite the absence of any express obligation in the lease, there had been an implied liability to contribute to the costs of heating and hot water provided to the flat.

That implied obligation arose as a result of an estoppel by convention: see Roundlistic v Jones [2016] UKUT 0325 (LC). However, an estoppel by convention only lasted for so long as it was unjust for the parties to allow one of them to go back on their common assumption.

The reasons established by the tenant for disconnecting the flat from the communal system rendered it unjust to expect him to continue to contribute towards the costs of fuel oil or the maintenance of the communal heating plant. The principle is that parties who establish a conventional arrangement by estoppel can terminate it. If one party elects to withdraw from the convention, the other can do likewise, and this will terminate both the convention and the estoppel it would have supported. Thereafter, it is not open to either party unilaterally to reinstate the convention; this requires the consent of both parties to the estoppel.

Practical points for property managers
It has become increasingly common for landlords to rely on estoppel by convention to recover service charges for items which are not specified in the lease. But this case shows there are limits. It is always possible for the parties to end the estoppel where it ceases to be ‘unjust’ to maintain it.

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

Other recent must-read cases include:

Worthington v Metropolitan Housing Trust [2018] EWCA Civ 1125
A housing association had unlawfully harassed tenants within the meaning of the Protection from Harassment Act 1997 s.1, by sending letters over an eight-month period which threatened an injunction and possession proceedings without any proper basis. This conduct was found to be oppressive and unacceptable.

Tanfield Chambers triumphs at ERMAs

For the third year in a row, Tanfield has won Chambers of the Year at the Enfranchisement and Right to Manage Awards 2018.
Philip Rainey QC, Tanfield Head of Chambers, was also recognised, winning an Outstanding Achievement Award, with Mark Loveday being Highly Commended.

Talking points

Why a common sense approach to ground rents is now critical

Mainstay Chair David Clark argues the case for retaining institutional investment in the residential property sector

The Government has suggested that all future leases on flats might be set with ground rent at zero. The rise in ground rent values that has allowed the capitalisation of this asset class has indeed seen some very badly-behaved developers seeking to maximise the return on the sale of the freehold. However, whilst this market has developed hugely in the last 25 years it is not all bad news - particularly where complex tenure and physical structures call for a degree of responsible oversight by organisations who have their reputation to protect.

Enter the pension funds and large-scale investors who will ensure that covenants are consistently and fairly upheld, that insurance is placed and that health and safety compliance is paramount. These are valuable powers that are sometimes overlooked where those responsibilities are given to reluctant resident directors who are pressured to constantly cut corners and manage costs - at the price of good asset management.

Good institutional landlords now dominate this sector, having purchased many billions in ground rent assets in recent years. This is a good thing for leaseholders who know that in a crisis the landlord will step in and ensure that works are undertaken, insurance cover is at the right level, long term capital expenditure plans are in place and proper risk assessments are undertaken and acted upon.

Do away with ground rents and there is potential impact on the value of those investments and a shift that could see the return of small scale investors looking to take advantage not just of the rental income stream but of the peripheral income available through most leases.

Good asset management by institutional grade investors in this quality investment product adds value for all stakeholders - including leaseholders. It also adds a genuinely sophisticated and dynamic level of asset management and safety oversight.

On increasingly complex developments with mixed tenures, including shared ownership and private rental, an overarching landlord strategy can be the glue that binds a community and creates a sense of place. In the new world of build to rent (where it is possible that units could in future be retailed as long leases) institutional landlords will become the norm. Leasehold owners will rightly expect the same level of attention to quality and service that the build to rent revolution will routinely have to deliver in a highly competitive environment.

So, prevent the application of short term doubling clauses, set a universal review mechanism and index. Limit starting ground rent values to a percentage of the apartment values as agreed with a chartered surveyor and you have created a transparent approach that will actually enhance the value of a scheme and allow residents to purchase the freehold at a reasonable price if they choose to do so.

Institutional investment in residential property is a good thing, It is transformative and should be encouraged.

David Clark is at Mainstay. Read more from David here.

Don’t fall foul of Corvan

In light of the recent Corvan case, Paul Robertson urges property managers to take a closer look at other agreements that may fall within the scope of this ruling

The recent court of appeal decision on Corvan (Properties) Ltd v Abdel-Mahmoud should act as a wake-up call to property managers in respect of what constitutes an agreement of more than 12 months. The reality is that there are many other agreements which do not qualify and property managers need to learn how to spot them.

The premise of the Corvan case is that the management agreement ran for a 12-month period; however the cancellation clause could only be served in such a way that the agreement had to run for a further three months. Effectively, this meant the shortest period the agreement could run for was 15 months and it therefore became a qualifying long-term agreement, limiting the maximum due from any lessee to £100 in any one period.

As it is now incumbent on property managers to review their agreements in light of the Corvan decision, it is also vital not to overlook insurance policies. These may contain practices that would almost certainly be interpreted by tribunal in the same way.

The obvious way to fall foul of the FTT would be to extend an insurance policy beyond 12 months to move the renewal date. It is not uncommon for this to be requested so how should property managers deal with such an eventuality? The answer here is simply to renew for a 12-month term and then have a short term policy issued (i.e. for a month) as opposed to requesting a 13 month policy.

Less obvious is the practice of long term agreements, premium stability or premium rebates, all of which can fall foul of the principles laid out in Corvan. But what are these practices and how do you spot them?

A long term agreement on an insurance policy is simply an undertaking by the insured that, in exchange for committing to remaining with an insurer for a fixed period (normally either three or five years) the insurer will discount the rate (normally by between 5% to 15%). While such agreements don’t actually commit the insurer to offer renewal it is hard to argue that the intent of such an agreement is not to insure for more than 12 months.
Premium stability clauses can be combined with long term agreements or operate in isolation but in essence the premise is that the insurer will maintain the rate being charged if the insured continues to remain with the insurer for a fixed period of years, subject to the claims experience not exceeding certain parameters. Again, the inference of such a clause is that the insurance policy is intended to run for a period of more than 12 months.

Premium rebates are deals that offer the insured an incentive to renew if their claims experience is below a certain threshold. Essential they refund a proportion of the previous year’s premium (typically three months after renewal) and are offered over a defined number of years. Most of these are constructed in such a way that it would be difficult to argue they are not intended to form long term contracts.

The good news is that these are normally easy to spot as they are written on the insurance schedule. If you encounter such practices, you should look very closely and consider whether or not they constitute a qualifying long-term agreement. If so, unless you have dispensation, tribunal could rule that each lessee is only liable to pay £100 per term.

Paul Robertson is managing director of Midway Insurance and 1stSure Flats

www.midway.co.uk

Topic of the month

Open data – the opportunities for property managers

In June, Ordnance Survey announced that key parts of the OS MasterMap® are being opened up to UK business in support of the Government’s commitment to a “more open geospatial data infrastructure for the UK” via a suite of application programming interfaces or APIs.

If you’re not sure what this might mean to your business, you’re probably not alone. The OS MasterMap® is a database that records every fixed feature of Great Britain larger than a few metres in one continuous digital map. Different datasets relate to different types of feature. So the Greenspace Layer shows green spaces and the Topography Layer includes landscape features including building heights and functional sites, trees, hedgerows and fences. There are also datasets for highways, the water network and paths. The aim is to provide open access to this information - with small businesses being given priority - to help support and inform decisions around development, infrastructure planning and the provision of services. Read more here.

Dan Hughes, former PropTech lead at the RICS and now CEO at LIQUID Real Estate Innovation, explains that most of the activities undertaken in the property sector are underpinned by location data and that opening this up has potentially important consequences.

•    Planning applications - more data will be available for use, meaning that planning applications are both more comprehensive and also more up to date. A planning map should always be up to date, but often is not; this should make it easier.
•    Development planning - access to more data should make decision making much better.
•    Conveyancing - OS data underpins much of the data conveyancing process. Making Mastermap open will ease the conveyancing process and searches and speed it up.
•    Construction – OS data is often used for design and construction planning processes. Making it more available means better use of the data which should mean better and more efficient construction.
•    Property management – more open access to MasterMap data will ease some of the challenges around accessing other data sets that are based on it, which are essential for property management, from ownership of land to increased information on the surrounding area.

Perhaps most important for the residential management sector is the stated intention that, as well as making MasterMap data available, during the next 12 months OS will also be working towards “opening up the key identifiers UPRN and USRN... for the whole of Great Britain.” In 2015, there was a limited release of UPRNs, enabling some sharing of public and private sector addressing databases.

If you’re not familiar with these acronyms, the chances are that you soon will be. In the same way that everyone in the UK over the age of 16 has a National Insurance number and every book features an ISBN reference, every addressable location in the country has a Unique Property Reference Number (UPRN) and a Unique Street Reference Number (USRN). These act as a golden thread, uniquely and definitively identifying every spatial address in Great Britain and linking multiple information sets about each property. The numbers remain consistent through a property's lifecycle, from planning permission to demolition, and are found within Ordnance Survey's AddressBase products.

UPRNs are already used by organisations to link multiple datasets. For example, a local authority and utility company can continue to hold their own address information in existing formats, but by adding a single field for the UPRN, they can easily link matching records in their own databases together.

This could have a huge impact on the way the property sector works by providing a one-stop shop for land and property information across the country. Most transactions, provided by thousands of different organisations, include an address or street reference - from connection of utility services, quotations for insurance, delivery of packages, collection of waste, streetworks and maintenance contracts to delivering company accounts.

Opening up UPRNs has endless possibilities. Landlords and property managers will more easily be able to identify the key stakeholders and suppliers related to the buildings they own and manage. Much like looking up a car registration number and being able to tell when it was MOT’d, taxed and insured via the DVLA website, in future it will be possible to access data relating to individual flats as well as residential blocks.

In the build-to-rent market, geospatial data could be used to accurately and remotely survey sites with information available to enable design of homes most suited to the local rental market. No local green space – design it into the scheme. Local transport hubs too far to easily access – include bike storage and an in-house rental scheme to get residents cycling to work or to the station.

If this sounds a little too good to be true, it may be – at least for the next few years. And, as ever, there are problems to be overcome. As a Guardian article pointed out in 2014, “…data is all very well but the ability to extract meaningful information from it requires considerable skill.” Without it there is a very real danger that incorrect conclusions may be drawn. There will also be issues around data handling and privacy to be taken into consideration. But despite these potential pitfalls, property managers should watch this space because open data is on its way and those businesses which are early adopters and are able to determine how to use it to their best advantage will be ahead of the game.

Find out more about open data and its impact on property in this article by Dan Hughes.

Events

IRPM Diary dates

15 August 2018 - Associate Exam Workshop - London

16 August 2018 - Associate Exam Workshop - London

11 September 2018 - Associate Exam in London & Birmingham

13 September 2018 - Regional Seminar, Brighton

26 September 2018 - AGM

02 October 2019 - Regional Seminar, Birmingham

03 October 2018 - Member Exam Workshop - London

04 October 2018 - Member Exam Workshop - London

10 October 2018 - Regional Seminar, Bristol

23 October 2018 - Regional Seminar Manchester

30 October 2018 - Member Exam in London & Manchester

01 November 2018 - Regional Seminar, London

ARMA

To book ARMA training courses

IRPM members (associates and above) can attend ARMA courses at the discounted ARMA members rate.

LEASE Webinars

LEASE has many

Brethertons Webinars

IRPM members get a substantial discount on the charges for these webinars.

ARLA Propertymark

To book courses for 2018.

Chartered Institute of Housing

For more information on their events visit their website.

National Leasehold Group

For their seminar listings

RICS (open to non-RICS members)

For all RICS courses

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