Property News

Property News – VFM Property Management

Property Cladding and Building Safety Update

ARMA December  2020

Building Safety Campaign group is pressuring for action  to :-

• Extend the deadline for applications to the Building Safety Fund – the
current deadline has always been unachievable for most applicants,
particularly as the release of funds is proving very slow
• Introduce a risk matrix instead of a reliance simply on height as a qualifying feature – prioritise funding based on the risk to life
• Extend the fund to fix blocks of all heights, not just those above 18m and cover issues such as flammable balconies, unsafe structures, waking watch, unreasonable building insurance increases and alarms
– Meetings with MP’s continue and several sets of written questions have been asked in HoC, HoL and PM Q’s.
– Gov stance is that Developers and Building Owners should be asked to pay but the words “avoiding unaffordable costs” are starting to be seen re leaseholders.
– We hope for a Parliamentary Urgent Questions debate before parliament rises re the deadline and funding
– Weekly meetings with Cladding Action Groups – lack of communication is the main feedback

Grenfell enquiry revealed that Celotex falsified fire testing on RS5000 foam panels to pass their materials
– MHCLG announced that buildings without cladding do not require the EWS1 form
– MHCLG announced £700k to train 2,000 more building assessors via RICS. PI is still an open question

Government steps in to help homeowners caught up in ‘EWS1’ process

Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property.

A publication by the Ministry of Housing, Communities & Local Government dated 21 November 2020 clarifies the position regarding the need for EWS1 Forms being required by mortgage lenders.

 Owners of flats in buildings without cladding will no longer need an EWS1 form to sell or re-mortgage their property – thanks to an agreement reached today (21 November 2020) between the government and the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association (BSA).

This is part of a wider government-led solution to support those homeowners who have unsafe cladding on their buildings and where there is still more to do https://www.gov.uk/government/news/government-steps-in-to-help-homeowners-caught-up-in-ews1-process

Housing Secretary Rt Hon Robert Jenrick MP said:

Through no fault of their own, some flat-owners have been unable to sell or re-mortgage their homes – and this cannot be allowed to continue.

That’s why the government has?secured agreement that the EWS1 form will not be needed on buildings where there is no cladding; providing certainty for the almost 450,000 homeowners who may have felt stuck in limbo. However, this is only part of a wider solution and we continue to support those homeowners who do have cladding on their buildings and where there is still more to do.

Buildings insurance premiums set to increase in 2021 

Insurance in the residential block management sector is facing a perfect storm according to an article published on ARMA’s website.

Premiums across the whole residential market are increasing and health and safety concerns regarding cladding and wall systems have only added to the problem.

The ARMA report cites the main drivers affecting the rapidly changing insurance landscape as follows :-

1. Increased awareness of high-rise building safety, following the events at Grenfell Tower in 2017;
2. A 600% increase in global financial lines fraud; insurers have suggested that
annual claims will increase twelve-fold throughout 2020/2021;
3. Reduced staffing resource and increased IT costs, due to the new working from home restrictions;
4. Unprecedented increases in claims inflation of up to 20% over a five-year
period..

Please refer to your VFM property management team for further details

Client Money Protection in the private rented sector – Mandatory from 1 April 2019
IMPORTANT NEWS

Client Money Protection (CMP) is mandatory in the private rented sector from 1st April 2019
But who does the mandatory CMP apply to?

From 1st April 2019 letting agents in England must belong to an approved CMP scheme by law which requires to protect both tenant and landlord client monies. Letting agents must comply or risk heavy penalty fines with a limit of up to £30,000.

Under the new legislation, client monies held require to be protected through a Government-approved client money protection scheme. This covers client money held by an agent in the course of residential property lettings or management of those lettings as set out in s. 54-56 Housing and Planning Act 2016. The types of tenancies are limited to those of 21 years or less in length.

The block management sector which applies to residential long leaseholds (where leases exceed a term of 21 years) remain unaffected.
The CMP mandatory requirements are therefore not applicable to residential block management agents who do not hold property lettings monies for clients and there is currently no plan to introduce such a mandatory requirement.

MHCLG publishes essential advice for residential building owners regarding fire and health and safety  

In January 2020 the Ministry of Housing, Communities and Local Government (MHCLG) produced Advice for Building Owners of Multi-storey, Multi-occupied Residential Buildings which includes the following extract :-

It is necessary to consider the risk from fire spread to health and safety in
relation to a residential building regardless of height. When considering the risks building owners should consider the full range of risk factors. The Expert Panel’s view is that the vulnerability of occupants is a significant factor in assessing this risk and, in some instances, may be more significant than building height.
Building owners or their appointed competent professional advisors(s) should check that the external wall systems on their buildings meet an acceptable standard of safety and do not contribute to the external spread of fire, irrespective of building height. Spandrel panels (including window and infill
panels) are also part of the external wall of the building and should be checked.
Balconies, and risks arising from their construction materials, geometry and use, must also be considered.
Where building owners require further technical advice it must be provided by a competent person, as this is critical for ensuring that an appropriate level of safety is achieved. In some cases, the analysis needed may be straightforward, in which case a competent fire safety professional with adequate experience in fire safety and knowledge of external wall systems may be used. In others, it will be more complex and require advice from a qualified engineer with relevant experience in fire safety, including the fire testing of building products and systems, such as a Chartered Engineer registered with the UK Engineering Council by the Institution of Fire Engineers.

HCLG leasehold reform report recommends significant changes impacting block management agents, conveyancing solicitors, landlords, developers and estate agents throughout England and Wales.

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

New measures announced by government on 21 December 2017 to cut out unfair and abusive practices within the leasehold system, including a ban on leaseholds for almost all new build houses.

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)

On 25 May 2018, the European Union’s General Data Protection Regulation (GDPR) came into force.  GDPR is arguably the biggest shake up of data collection rules in 25 years and affects the way in which all businesses including managing agents will operate, record, hold and dispose of personal data.  Property managing agents will require to be GDPR Registered, requiring careful control of all data in accordance with their Privacy Policy.

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

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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