Industry News

Title: Block Management White Paper reveals £500m impact on UK economy


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ARMA has produced a White Paper Report: ‘An Overview of the Residential Block Property Management Sector in England and Wales’ which reveals that the sector contributes £500m to the UK economy.

To read the Report click here.

The Report provides a comprehensive overview of the sector, including key statistics such as: market size and tenure, service charges, managing agent industry breakdown, profitably, contribution to UK economy, etc. At a time of unprecedented change in the sector and increased focus on the leaseholders’ voice, it also outlines ARMA’s position on the regulation of managing agents and leasehold reform.

ARMA CEO, Dr Nigel Glen, said: “Really, we’ve compiled the Report as a valuable reference tool to help interested parties - either those working directly in the sector or those involved in research - find out more and demystify the sector. The Report contains a rich vein of data, some of which was already available - just not all in the same place - and some from ARMA research and sources further afield”.


Description: Thu, 13 Jun 2019 10:56:00 +0100

Title: Government to fund cladding replacement in privately owned high-rise buildings


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The Government has today (9th May 2019) announced that it is to fund vital cladding replacement in privately owned high-rise buildings.

Around £200 million will be made available to remove and replace unsafe aluminium composite material (ACM) cladding from around 170 privately owned high-rise buildings.

ARMA CEO, Dr Nigel Glen, said: “ARMA is delighted that Government has agreed to fund cladding replacement in privately owned high-rise buildings. Leaseholders can finally get their lives back on track in the knowledge that their homes will be made safer.

“This was a call first made by ARMA directly to the Secretary of State immediately after Grenfell and we have to congratulate the pressure groups that helped bring about this significant move, allowing affected leaseholders to finally live safely in their homes.”

ARMA is in close discussions with MHCLG about how the scheme will work and will liaise with its members through its High Rise Fire Risk group.


Description: Thu, 09 May 2019 12:22:00 +0100

Title: Disputes between occupiers can take up too much management time


Description:

Managing agents are frequently called in to deal with disputes between Leaseholders in blocks of flats. Particularly so in older conversions where noise issues pre-date stricter building regulations.

This is one of the issues that can frequently occur in building management yet can take up a disproportionate amount of time.

Why do agents get involved?

  • Pressure from Lessees
  • Pressure from a flat management company.

There unfortunately is widespread misconception of the role of a managing agent in handling disputes between occupiers. This can generally arise through not understanding the lease and the covenants that may or may not be contained within the lease. 

The general misconception is that a leaseholder who has a noise issue complains directly to the managing agent to deal with the issue on their behalf which may be a request to enforce the conditions in the lease.

Firstly, let’s put ourselves in the position of a freeholder when the leases were originally drafted. Why would a freeholder allow a clause to be in a lease that obliged them to spend their own funds on a dispute between occupiers? They can’t dig into the service charges as disputes between occupiers do not come under the heads of expenditure.

The old RICS guide was very misleading in its guidance on disputes – even suggesting that an agent should ‘enforce the conditions of occupancy’ and ‘remind complainants about counter arguments’.

Procedures which remind me more of a headmistress than a professional agent with a clear-cut role.

It is essential to remember that the role for any managing agent is to act on behalf of the freeholder in accordance with the terms of the Lease.

In the case of disputes between occupiers, if the freeholder cannot intervene nor can their agent.

Freeholders were never intended to act a block policemen. In 2015 the RICS convened a Working Party to discuss the new Code of Conduct published in 2016.

I was part of this. It gave me the opportunity to make them aware that their previous Code was misleading and all credit to them the new Code more than makes up for this by completely re-writing that guidance.

A typical lease will require the freeholder to uphold the covenants in the lease but there will be a caveat. These are the magic words that can in many cases halve an agent’s work on that least popular of tasks – disputes between occupiers.

The caveat: The lessee must indemnify the lessor against all costs and expenses of such enforcement.

In addition, many leases will also say that the freeholder does not even have to take up the complaint at all unless they believe it is in the interests of good estate management or ‘satisfied that the lessee would be prejudiced by the lessor’s failure to enforce such covenants.’

Without extra funds, where is the money to come from to pursue a leaseholder who has, for example, a piano playing habit after 11pm which bothers a neighbour?

I remember one well known surveyor now retired who when he saw the light round the RICS table at the working party said “if only I had known that long ago”!

If only more were aware of these clauses, so many errors could be avoided especially in using service charge money to pursue these disputes.

In response to the leaseholder who says “do you mean the lease is worthless” the answer is “no – but under the lease our hands are tied – subject to your indemnifying the landlord”.

Up-to-date RICS guidance

The below extract is taken from the 3rd edition of the RICS Code of Practice (Service charge residential management Code and additional advice to landlords, leaseholders and agents).

"5.2 Disputes between occupiers

You should always refer to the lease when dealing with disputes between occupiers. You cannot go further in dealing with the parties than the landlords remit under the lease.

Most leases will not allow you to recover any costs from the service charge in connection with disputes between occupiers.

The local authority may help in establishing evidence of noise, anti-social behaviour or keeping animals in unsuitable conditions.

You should always have regard to the enforceability clause in the lease before embarking on any action which involves expense from the service charge.

Leases typically contain a mutual enforceability clause requiring landlords to seek an indemnity for their costs from leaseholders requesting enforcement. This may also leave the landlord the option of choosing not to enforce if it is not ‘in the interests of good estate management’. (My bold.)

Any enforcement action should be with your client’s authority and confirmation that the client will be responsible for the costs until or unless recovered from the leaseholder. This can be by way of requesting estimated costs in advance as part of the indemnity.

Complainants should be given realistic estimates of the likely time and cost involved in any enforcement. You should also consider other methods of dispute resolution such as mediation, be familiar with local mediation services and suggest this method of dispute resolution, where appropriate. Information on mediation service providers can be obtained from the National Mediation Helpline. (See Part 5.5 Alternative dispute resolution and mediation.)"

A typical Lease enforceability clause

“The lessor shall if reasonably so required by the lessee enforce covenants and conditions similar to those herein contained in leases entered into or to be entered into by the lessees of the other flats in the building having regard to the terms and conditions in those leases.

SUBJECT to the lessee indemnifying the lessor against all costs and expenses of such enforcement and providing in advance such sums as the lessor shall require as security for such costs and expenses and provided that such enforcement shall in the opinion of the lessor be in the interests of good estate management.”

We are grateful to Shula Rich, BA MSc, for writing this article for AQD. Shula is a leaseholder, a freeholder and a block management consultant. She project manages RTM's and has been thanked in Parliament for changes to leasehold law. Her lectures are featured with GKJ Consultants and Shula’s website is www.shularich.co.uk.

ARMA has an Advice Note ‘Noisy Neighbours’ within the ‘Leaseholders Advice’ section of its website which contains advice for dealing with noise problems: https://arma.org.uk/leaseholders//leaseholders-advice/noisy-neighbours.


Description: Wed, 01 May 2019 15:40:00 +0100