In July 2018 the Housing, Communities and Local Government Committee (HCLG) launched an inquiry into the Government’s programme for leasehold reform. This followed the Government consultation in 2017 into tackling unfair leasehold practices in the UK property market.
The HCLG report on leasehold reform published on 19 March 2019 includes important and wide reaching recommendations affecting the management of blocks of flats and other leasehold property which are briefly summarised below.
Government policy should ensure that Commonhold becomes the primary means of ownership for flats in England and Wales.
The start of the property sales process should require that developers or estate agents produce a key features document in a standard form.
A recommendation to introduce new consultation procedures for privately owned properties to protect leaseholders affected by high value major works with a £10,000 threshold per leaseholder. Works exceeding this value should require the consent of a majority of leaseholders in the property before proceeding.
Mis-selling in the leasehold sector should be subject to investigation by The Competition and Markets Authority which should recommend appropriate compensation measures.
Ground rents on new leases should be Peppercorn or nil value.
The HCLG Committee has reached a conclusion that the Government would be legally able to introduce new legislation which would effectively remove onerous ground rents from existing leases. Further restrictions could also be imposed limiting existing ground rents to 0.1% of the present value of a property. Ground rent should not exceed £250 per annum for any property.
To view the full HCLG report click https://bit.ly/2Cr6NNg
Crackdown on unfair leasehold practices
Ombudsman Services: Property (OS:P) to cease services in August 2018
OS:P has announced that it will end its current arrangements in offering OS:P as of 6th August 2018. Managing agent members will require to take up membership of an alternative approved redress scheme before the cessation of services.
General Data Protection Regulation (GDPR)
This new regulation will change the way many businesses operate, particularly in relation to how organisations handle and protect customers’ and users’ personal data. Data protection will become the cornerstone of your organisation’s policy and procedure.
The Construction (Design and Management) Regulations (CDM 2015)
On 6 April 2015, a new version of the Construction (Design and Management) Regulations (CDM 2015) was introduced.
CDM 2015 increases attention on smaller projects placing new obligations on clients and managers which have an impact on works being arranged by property management companies, leaseholders and freeholders in blocks of flats.
Important changes introduced can be summarised including :-
Removal of the CDM Co-ordinator
Principal Designer is introduced
Principal Designer and Principal Contractor appointments are required on “notifiable projects” or on schemes employing two or more contractors on site. It should be noted that this is likely to include an increased number of smaller projects.
The notifiable project notification threshold is revised.
CDM scope now includes domestic clients
The Client’s Role
Any building client must now make suitable arrangements for managing a project under the new CDM regulations.
Freeholders, developers and property management companies are all affected as building Clients’ whose key responsibilities include:
To notify the HSE of project details confirming that the project team are aware of their duties
To ensure all duty holders comply with their duties
To provide pre-construction information including asbestos surveys, existing health and safety files and structural drawings.
To ensure that minimum health and safety standards are maintained on site
To ensure that the construction phase health and safety plan is drawn up by the principal contractor.
To ensure that a health and safety file is produced by the principal designer.
To appoint a principal designer and principal contractor when mandatory “as soon as practicable”
Where these key appointments are not made, their duties transfer automatically to the property management company, freeholder or client.
The Court of Appeal has this morning, 31 October 2014, handed down their judgement in the long-awaited Phillips v Francis appeal.
It appears that common sense has prevailed in delivering a judgement that is good news for
property management companies, block managers, managing agents and all professionals involved in freehold and leasehold property.The Court of Appeal has now ruled that the earlier decision of the High Court, which favoured the “aggregating approach”, was “not a sensible approach”, clarifying that it gave “rise to serious practical problems”.
The Court found in favour of a “sets” approach to qualifying works, this being the approach adopted until the recent High Court Phillips v Francis decision. It was also agreed that the incorporation of an annual limit was incorrect.Property managing agents and freeholders can now go about their business with some certainty and clarity.
COURT OF APPEAL OVERTURNS PHILIPS V FRANCIS DECISION ON MAJOR WORKS : 31ST OCTOBER 2014|
ARMA welcomes the decision of the Court of Appeal to allow the appeal in the controversial case of Phillips & Goddard v Francis & Francis. Today’s judgement overturns the 2012 decision, which held that the cost of qualifying works was to be aggregated over a service charge year, with consultation to be carried out if the aggregated contribution exceeded £250 for any one leaseholder during that year.In allowing the appeal, the Court of Appeal has reinstated the previ…Read More …
ARMA RESPONDS TO CMA PLANS FOR LEASEHOLD SECTOR AFTER CONSULTING MEMBERS : 25TH SEPTEMBER 2014
Managing agents’ trade body, ARMA, has welcomed proposals to tighten up the leasehold property sector. Responding to proposals from the Competition and Markets Authority (CMA),
ARMA Chairman, Ben Jordan said:“We fully support the attempts being made to raise standards in property management. Action to encourage best practice in the sector is welcome and we will continue to promote the highest standards in property management through our self-regulatory regime, ARMA-Q. But, …Read More …
ARMA WELCOMES CMA PROPOSALS TO IMPROVE THE LEASEHOLD RESIDENTIAL MARKET : 1ST AUGUST 2014
Friday 1 August 2014 ARMA welcomes CMA proposals to improve the leasehold residential market
Today’s proposals by the Competition and Markets Authority (CMA) to address problems in the
workings of the residential leasehold property management market have been broadly welcomed by the industry’s trade body, ARMA.Ben Jordan, ARMA’s Chairman, said:“This is a welcome initiative by the CMA that could improve the sit…Read More …
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ERR ACT: ARMA MEMBERS WILL BE COMPLIANT
16TH APRIL 2014
All residential leasehold managing agents will have to sign up to a government approved redress scheme under the Enterprise & Regulatory Reform (ERR) Act expected to commence in October this year. The Act has been seen as an important boost to consumer rights as unlike estate agents, managing agents are currently unregulated.Under the terms of their membership, ARMA agents can join either the Property Ombudsman or
Omb…Read More …