Block Management 2020
Here is an overview of management items in buildings that freeholders should be aware of.
Public liability
Freeholders should hold public liability insurance for the building that covers accidents on the property.
Equally, directors should carry director’s liability insurance where the freehold is held in a company.
Health and Safety
Freeholders are a responsible person for health and safety in the common parts of the property. Key items of risk to be aware of include;
- Broken glass
- Slippery floors/stairs including spills
- Handrails
- Rubbish collecting / trip hazards
- Pest control
- Lift maintenance
- Loose electrical fittings
- Lifting pavements
- Cleaning – logged and specified
- Electrical safety – EICR every 3-5 years
- Gas safety – if any gas pipework runs through communal areas, this is a potential risk and it would be prudent to get it checked periodically. Every year would be prudent.
Fire safety
Fire safety is dictated by building regulations. Your building may be older and not build to modern standards. However communal hallways are usually a protected fire route and freeholders and managing agents are responsible for health and safety and fire safety so are duty bound to improve standards if required.
The LACORS Guide – 2008 https://www.rla.org.uk/landlord/guides/housing_act/lacors_fire_safety.shtml
gives guidance for landlords, agents and councils on fire safety in buildings that were not built in line with building regulations of 1991. The guide is being updated at the moment as it is over 10 years old.
This is a report from the London Fire Commissioner on fire safety risk in communal areas and was produced two years ago.
Some key areas that the responsible person should be informed on and keep check of include;
- Smoke alarms in hallways
- Ideally heat alarms inside flats too
- All linked
- Weekly testing – logged
- Fire doors with smoke seals and self-closers to all flats and cupboards
- Identify fire strategy – simultaneous escape or stay put
- Signage to show exits and routes out and fire strategy
- Non smoking signs
- How Magnetic Locks operate in the event of a power cut
- Whether emergency lighting would be beneficial
- Conduct or commission fire risk assessments periodically. Every 3 years would be reasonable for a 3rd party inspection. Regular top up assessment should be done ideally monthly and logged.
- Address any risks like buggies in hallways, furniture, collections of mail
- Electrical components should be behind fire doors
- Check on fire risk assessor’s advice on fire extinguishers
- Compartmentation between units should be 30 minutes including glass and around door frames, skirting and sockets.
- Egress without keys. Residents should be able to get out without using keys.
- Egress from flats without going through high risk areas. Residents should be able to escape from their flats without passing through living rooms or kitchens. First floor egress from windows is acceptable, but you should consider whether the occupants could manage this.
Maintenance
Gutters and drains should be checked twice a year for potential blockages and cleared and cleaned.
Roof inspections should be done annually, and roofs regularly maintained to prevent surprise leaks.
Redress / Licensing
No licensing requirement for communal areas unless the building is a registered HMO. However, freeholders should be a member of a redress scheme if they have a property manager appointed. As part of the ongoing leasehold reform by the government, this will be extended to freeholders who are acting as property managers. Reforms are also being sought for freeholders to have equivalent rights to leaseholders.
The Regulation of property agents is a working group and will have a code of practice in the foreseeable future for managing agents and landlords.
Security
The communal parts of the building should offer the highest level of security practicable. Communal doors should self-close promptly and firmly. Two locks on a communal door are preferable, but sometimes difficult to implement if electrical opening via the intercom system is in use.
Magnetic locks can circumvent this issue, and fob entry is then used.
Google Nest cameras are very affordable and easy to install making a CCTV system very achievable because the cameras record to a cloud storage facility. This is recommended if there is someone to monitor the recording. Signs advertising the fact CCTV is in use will discourage break ins.
Insurance
Freeholders have a duty to insure the building and will suffer if a cheap policy lets residents down. Use a broker to ensure adequate cover and try to get loss of rent and alternative accommodation cover for your owners who are letting their flats out. Often carpets won’t be covered under a buildings insurance policy, so you may need contents cover for carpets in communal parts.
Service charge accounting
Service charges are governed by the landlords and tenants act of 1985. Service charge demands must be accompanied by a summary of tenant’s rights and prescribed information necessary for validity in court such as the landlord’s address for service of notices. It is recommended that you read the page linked here to familiarise yourself with service charge formalities.
https://www.lease-advice.org/advice-guide/service-charges-other-issues/
Summary of service charge accounts; leaseholders (even if they are also freeholders) have a right to ask for a summary of the service charge account. This summary should include all relevant costs from the last 12 months and should be provided within a month and should include;
- how the costs relate to the service charge demand, or that they will be included in a later demand (if this applies);
- any items which the landlord did not receive a bill for during the accounting period;
- any items which the landlord received a bill for but which they didn’t pay during the accounting period;
- any items which the landlord received a bill for and which they paid during the accounting period; and
- whether any of the costs relate to work for which an improvement grant has been or will be paid.
Freeholders also need to allow for the accounts, receipts and documents to be inspected upon request.
Under reforms in discussion, there may be a standardization of service charge demands to ensure clarity for leaseholders.
S20
Freeholders must consult with leaseholders (even if they are also freeholders) for any qualifying works. This includes one-off costs that are going to exceed £250 per leaseholder and long-term contracts (1 year or more) that are going to cost more than £100 in a year. There is a prescribed process for a consultation, and it takes at least two months. It is recommended that you read the below link to familiarize yourself with the consultation procedure;
The s20 consultation procedure is likely to be reviewed as part of the ongoing leasehold reform and contributions capped at £10,000 per leaseholder without the majority agreement of leaseholders.
Sink funds
Sink funds collected by freeholders should be held in separate trust accounts.
A code of practice in development will be encouraging sink funds for all buildings to prevent expected bills putting leaseholders under financial stress.
Potential future reforms
Ownership
- Apart from freehold and leasehold, there is also Commonhold ownership which was introduced in 2002 and hasn’t been adopted by the country. The reforms are pushing for a re-invigoration of commonhold ownership as a solution for simplifying the ownership structure and distribution of responsibility. This is likely to be for new buildings rather than converting existing, but do watch out for news regarding this.
Ground rent reforms
- There is quite a bit of talk about reducing all ground rents to a peppercorn to remove the value in freeholds and to stop leaseholders being bound to pay increasing levels of rent as this is deemed largely unnecessarily and unfair. Some existing leases will need to be amended under new legislation.
Restrictions on permission fees
- Leasehold reforms could potentially put limits on permission fees charged by freeholders to ensure they only cover reasonable administrative costs only and are not a profit making exercise.
The government’s response to the proposed reforms on leaseholds are in this link.
I hope this information has been helpful.
If anyone wishes to discuss anything further or suggest other information, please contact me on paul@acara.co.uk
Kind Regards
Paul Rowland
Director – Acara Management