Property management Flashcards
How do you manage the relationship between landlords and tenants, being clear on respective responsibilities?
- communication and negotiation
- listen, clarify, record
- read and breakdown lease docs
- explain lease terms, obligations under law
- recommend pro advice
- understand client strategy/instructions,
update regularly, internal escalation where needed - advise on options to resolve disputes
e.g. ADR, litigation
How do you use internal escalation for property management issues?
senior colleague, manager, HoS, AD
depending on case/severity/urgency
How do you advise on dispute resolution procedures for property management disputes?
communication and negotiation
ADR inc clause in lease
litigation options
advise on reasonableness/how likely to succeed
What heath and safety legislation relates to management and occupation of buildings?
Corporate Manslaughter and Corporate Homicide Act 2007
- serious management failures resulting in a gross breach of a duty of care
(unlimited fine)
Occupiers Liability Act 1957
- duty of care to visitors
Occupiers Liability Act 1984
- duty of care to unlawful visitors
(personal injury and damage to property, unlimited fine?)
Defective Premises Act 1972
s1 people connected to works for new dwelling
s3 duty of care people connected to works of repair, maintenance, construction, demolition
s4 LL who has implied/express obligation to repair/maintain has right to enter
(Building Safety Act 2022 up to 2 years’ imprisonment or fine?)
Electricity at Work Regs 1989 (EAWR)
Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020
- 5 year fixed installation inspection
Gas Safety (Installation and Use) Regs 1998
- annual gas safety check
- record to tenants within 28 days
- maintenance
Gas Safety (Management) Regulations 1996 (as amended) (GSMR)
- management of the safe flow of gas
Pipelines Safety Regulations 1996 (PSR)
- pipes for conveying fluids inc gas
- inc maintenance
Pressure Systems Safety Regulations 2000 (PSSR)
- pipelines include: compressors; valves; associated pipework; and other apparatus used to cause the gas to flow through the pipeline system
Water Supply (Water Fittings) Regs 1999
- designed to stop the waste, misuse, undue consumption, erroneous measurement and more imp
- cover all plumbing systems, water fittings and equipment (in place or to be delivered) using the public water supply, beginning from the point where water enters the underground service pipe to where it’s used
Regulatory Reform (Fire Safety) Order 2005 (gov “fire safety risk assessment” series)
- Fire Risk Assessment in commercial premises by a competent person, if you are responsible for the premises
- premises need to reach the required standards
- employees are provided with adequate fire safety training
Fire Safety (England) Regs 2022
- came into force 23 January 2023
- requirement for Responsible Person of high-rise resi bdgs (at least 18m tall or 7 storeys) to provide info on bdg to local fire service inc details of construction of walls, floor, bdg plans, known faults with firefighting equipment
- info must be shared electronically
The Smoke and Carbon Monoxide Alarm (England) Regulations 2015
- at least one smoke alarm installed on every storey of property
- a carbon monoxide alarm in any room within those properties containing a solid fuel burning appliance
Building Safety Act 2022
- protections for leaseholders from costs of remediating historical bdg safety defects (can’t charge bdgs over 5 storeys or 11m removal/remediation of cladding)
- measures for those responsible for bdg safety defects to be held to account:
timeframe DPA72 extended up to 15 years from PC rather than 6, retrospective 30 year limitation period;
s38 claim for physical damage caused by breach of bdg regs at time of construction, applies to all bdgs; limitation 15 years;
Building Liability Order potential joint and several liability for associated companies, relating to claims under s38 or DPA (e.g. where developer insolvent/SPV)
- Accountable Person for “higher risk bdgs” 18m or 7 storeys with at least 2 resi units;
responsible for ensuring fire and structural safety properly managed;
defined as person or company with legal ownership of, or repairing rights of, common parts of a bdg (could be more than 1, in which case must be “Principle AP” with overall responsibility);
duty-holders required to maintain “golden thread” of bdg info throughout lifecycle
Control of Asbestos Regs 2006
- management survey – the minimum required for managing a commercial building
- refurbishment survey – required where any intrusive/ refurbishment/demolition works are planned
- HSE guidance identify which materials can be removed by licensed and unlicensed contractors, and by what method
- asbestos management plan
Lifting Operations and Lifting Equipment Regs 1998 (LOLER)
- all equipment used for lifting is fit for purpose, appropriate for the task, suitably marked and, in many cases, subject to statutory periodic ‘thorough examination’
- records must be kept of all thorough examinations
- any defects found must be reported
RIDDOR 2013
report and keep records of work-related accidents
Health & Safety at Work etc. Act 1974
1. Provide a safe place of work
2. Prove safe equipment
3. Ensure staff are properly trained
4. Carry out risk assessments
5. Provide proper facilities
6. Appoint a competent person to oversee health and safety
Duty of care, so far as is reasonably practicable
S4 – duty of person in control of premises
Management of Health & Safety at Work Regs 1999
places duties on employers and employees including those who are clients, designers, principal contractors or other contractors
many duties overlap CDM, go beyond for young ppl and expectant mothers
Workplace (HS & Welfare Regs) 1992
basic health, safety and welfare issues
PPE Regs 2018
Control of Substances Hazardous to Health Regs 2002 (COSHH)
Provision and Use of Work Equipment Regs 1998 (PUWER)
Manual Handling Operations Regs (MHOR) 1992
DSE 1992
What did you include in the SCC tenant handbook to give info for tenants on obligations as occupier of commercial premises?
How do you adhere to “Real estate management, 2016”?
PS, 3rd ed
Ethics, Accepting instructions, Ending instructions, Safety and security
Managing real estate:
- Principles (quiet enjoyment, be contactable, deal with applications expeditiously)
- New Lettings, Lease Renewal (negotiate openly, stating alt terms with diff rents)
- Rent (efficient arrears procedures)
- Repairs, Insurance, Service charges, Alterations, Assignment, Termination
- Breach of covenant, enforcement, forfeiture (bring to client’s attention asap, approval)
- Lease restructuring
- Sustainability
- Info management
Portfolio and asset management
- capital value one of most important considerations for real estate manager
- opportunities, strategy
Principles:
- honesty, diligence, don’t discriminate, comms timely, marketing truthful
- CoI, ToE, PII, CHP
- client money held separately, realistic assessment of rent/costs using pro opinion
- make scope of services clear to all; inspections etc. in line with client wishes with H&S
How do you adhere to “Service charges in commercial property, 2018”?
Service costs:
- transparent
- management fee fixed price
- no profit
Allocation and apportionments
- costs should be allocated to relevant expenditure category
- where reasonable, costs should be allocated to separate schedules and the costs apportioned to those who benefit from those services
Comms and negotiation:
- managers should communicate with occupiers to ensure services delivered effectively
- ensure occupiers understand what they should receive and how much pay
- CHP
Duty of care:
- to both owners and occupiers to act with pro care
- clear policies as to how S/C will be managed
Financial competence:
- approved by qualified surveyor
- annual statement of S/C expenditure
- Industry Standard Cost Classifications used to report budget and actual expenditure (see appendix B)
Occupier responsibilities:
- ensure prompt payment
ADR:
- all new leases to make provision for either party
- where leases do not allow for ADR, nothing to stop
- mediation (w/p), ind expert (binding), usually split cost
Timeliness:
- issue budget to occupiers, inc explanatory commentary and apportionment matrix, at least 1 month prior to start of S/C year
- detailed statements of actual expenditure with accounting policies and explanations, should be issued within 4 months of the S/C year end
- must hand over records within 4 months of a sale/change of manager
Transparency:
- prompt notification of material variances to plans or forecasts ensures better working rels
VFM:
- service quality should be appropriate to location, use, character of property
- aim to achieve effective, VFM service rather than lowest price
Exclusions:
- initial costs in rel to construction
- set-up costs of on-site management offices
- improvement costs (but can enhance where justified)
- future redev costs
- costs rel to owner’s investment interest i.e. asset man, rent collection
- costs rel to void premises/owner’s own use
- costs arising through negligence
Procurement of FM:
1. clearly defined, detailed scope of services
2. clear objectives for procurement cost
3. evaluation criteria reflecting objectives
4. clear pricing structure, what services/costs inc/exc
5. clear timescales for procurement process
6. clear payment mechanism
7. compliance with data protection rules
Direct recoveries:
- traditionally, bdgs insurance apportioned as a separate charge and occupiers responsible for payment of utilities direct to provider
- in some cases, lease may provide
- where a service is provided directly to an occupier i.e. water/elec, important that manager and occupier understand basis on which service is provided and whether costs inc S/C or separate charge
- separate metering, or full submetering of utility supplies, considered essential to ensure an apportionment of costs between occupiers that reflects actual consumption and usage
Schedules:
- may be necessary to divide S/C into separate schedules to reflect benefit of service
- occupiers will often pay diff % apportionments under diff schedules
Floor area apportionment:
- standard: the ratio the premises bear to the total lettable parts of the bdg/estate
- measurements in acc with RICS PM
- basis of measurement communicated to Ts with how floor areas established e.g. CAD/laser/tape
- fixed % or fixed amount is inflexible
T alterations:
- may affect floor area or use of services e.g. mezz floor
- if lease refs to basis of calc i.e. floor area, LL must factor in additional floor area
- if states “fair proportion”, surveyor to act reasonably
- state impact within licence for alterations
Communication:
- best practice regular meetings
- give management policy and key contact info
- resi mans follow statutory consultation procedures
New leases:
- should be in line with code
- may have renewals, may have 2 arrangements
- interim arrangements may be necessary to ensure practical operation until all leases modernised
- can inc sweeper clause but this should not cover items omitted from the lease in error
Mixed use developments:
- statutory constraints for resi:
LTA85, Housing Act 96, Leasehold Reform Act 2002
3 stage process, where T’s contribution exceeds £250pa
or provision of services over 12 months over £100pa
- RICS “Managing mixed use developments”, 2012
- RICS “Service charge resi man code”, 2016
Green leases:
- may be better to set up MoU
(share data on running costs and enviro measures)
Anticipated expenditure:
- PPM
- sinking fund (prevents T with short leases/where boiler replacement year 1 complaining)
- cannot insist where lease is silent
- the “ownership” of the money
- the purpose and timescale
- what will happen at end of lease/if bdg demolished?
- also reserve fund (prevents frustration, ooccupier-specific and short-term i.e. internal re-dec)
- also depreciation charge (owner reflects cost of initial instalment i.e. boiler)
How do you adhere to service charge principles in “Service charges in commercial property, 2018”?
- expenditure seek to recover must be as per lease
- recover no more than 100% of service costs
- budgets, inc commentary, issued annually to Ts
- approved accounts issued annually to Ts
- apportionment matrix issued annually to Ts
- monies (inc reserve/sinking funds) separate accounts
- interest credited to S/C accounts appropriately
- acting for T, advise only withhold sums in dispute
- acting for LL, error should be adjusted without delay
Appendix A compliance checklist
How do you deal with sinking funds/reserve funds?
- held in 1+ separate accounts in trust for occupiers
- reasonable estimate, specific identified expenditure
(e.g. replacement of lift, not unidentified future exp) - clear basis of calc of contribution, items relates to, anticipated lifecycle of item and previous funds
- owners to make payments for void premises
- S/C statements clear contributions to/expenditure from sinking fund account, with opening/closing balances, interest earned, tax paid
- where expenditure required for which fund established, owner should apply funds from fund
- on sale, vendor to pass all fund monies to purchaser, with accrued interest (seek advice on tax liability)
- charges in respect of depreciation belong to owner; where a depreciation charge made, owner responsible for cost of replacement; reasonable estimate of depreciation charge; clear basis of charge calc, details of specific items for which charge calculated
- reasonable depreciation charge considered as annual cost to owner rather than recovery of initial cost of installation
- depreciation charges and sinking/replacement funds mutually exclusive; depreciation charge cannot be made where a sinking fund is or will be made in respect of a specific item and vice versa
How do you adhere to “Commercial property management in England and Wales, 2011”?
2nd ed GN
General:
Services:
- meet investment objectives, stat obligations, T compliance, adequate insurance in place
- maintain tenancy records, financial admin inc rent collection/service charge
- man fees (fixed, not %), man policies
Ts:
- occupiers are LL’s customers, business generated from satisfied customers
- understand each party requirements, co-operation
Success = efficient, effective, accountable
Management = achieving defined objectives agreed with client on instruction
Prop Man contract
H&S legislation
How do you adhere to “Licence for alterations in commercial property, 2012”?
Archived May 2022!
- Tenant application
- Ideally 6-8 weeks prior
- Cost undertaking whether licence completes or not
- Check lease
- Unless explicitly states “consent not to be unreasonably withheld”, doesn’t apply
- If “improvements” LTA27, implied not to unreasonably withhold consent or delay
- If application initial fit out, check HoTs for costs but likely each bears own - Factors to consider
- Need to consult building/mechanical surveyor?
- An improvement that will increase rental value? Consider using s3 LTA27
- Financial bond? For major works or weak tenant
- Reinstatement/dilaps
- Health and safety docs
- Sustainability/EPC rating
(affects premises/measurement/service charge?
may need deed of variation re premises,
clearly document S/C impacts in licence for alterations) - Third party input
- Planning permission and building regs approval
- Inform insurer of planned works and seek approval if needed; check insurance covers during works; may need to amend sum that is insured post-works
- Check tenant and contractor have adequate employer’s liability - Response
- Consult client for decision
- Approved/with modifications/subject to conditions/rejected - Documenting
- Consent can be granted:
automatically (by way of lease terms)
a formal licence deed
a simple letter licence
- Whatever form, check contains necessary level of detail with plans to show existing layout and approved alterations layout (will help with reinstatement process) - Final inspection
- Check works carried out to required standard and in line with spec/plans
- Keep licence docs with lease to refer to at review/dilaps
How do you manage vacant properties?
- when take back property, risk assessment, advise which stat comp needs to continue
(depends if will be re-let quickly,
do another risk assessment if delays/changes) - biweekly inspections insurance purposes
- security e.g. patrols, shutters, lighting
- warning signs e.g. “fragile roof”
- consider switch off water, gas, electricity
(aware of impact on CCTV/security alarms) - seal up letterboxes (arson), remove visible post
- remove refuse/combustible materials
How is a Fire Risk Assessment carried out?
By law, if you are responsible for the premises, you need to make sure that a Fire Risk Assessment has been completed by a competent person.
It’s mandatory to carry out a detailed assessment identifying the risks and hazards in a commercial premises.
Additionally, your Fire Risk Assessment must be recorded if you have a total of five or more employees.
The responsible person for the premises is also required to:
- Consider who may be especially at risk.
- Eliminate or reduce the risk of fire as far as is reasonably practical.
- Provide general fire precautions to deal with any risk.
- Take additional measures to ensure fire safety where flammable or explosive materials are used or stored.
- Create a plan to deal with any emergency and where necessary record any findings.
- Maintain general fire precautions, and facilities provided for use by firefighters.
- Keep any findings of the risk assessment under review.
What are the Fire Safety regs 2022?
Commencing January 2023, the Fire Safety (England) Regulations 2022 (the Regulations) will make it a requirement for responsible persons of high-rise residential buildings to provide information on their building/s to their local fire and rescue service. A high-rise residential building is defined as a building containing two or more sets of domestic premises and is at least 18 metres tall or has at least seven storeys.
The information to be shared includes details of the construction of the external walls, floor and buildings plans, and information on known faults with key firefighting equipment. The Regulations state that this information must be shared via electronic means.
The Regulations 2022 have been introduced as an important step towards implementing the recommendations of the Grenfell Tower Inquiry Phase 1 report.
The Regulations apply to England only and are being introduced under Article 24 of the Fire Safety Order.
Most of the requirements set out in the Regulations are imposed on the responsible person (RP)
It is the Fire Safety Order that defines the meaning of Responsible Person in the context of both the Order and the Fire Safety (England) Regulations.
As the term “Responsible Person” has a legal definition, it is not open to building owners, enforcing authorities or others to choose to “make” someone the Responsible Person, nor can the responsibility for compliance with either the Fire Safety Order or the Fire Safety (England) Regulations be delegated to others (though the Responsible Person will normally need to engage other parties, such as contractors, to assist them in compliance).
For all practical purposes, in the case of a block of flats, the Responsible Person will be the person who has control of the premises in connection with carrying on a business. This will, typically, be the freeholder or the managing agents for the block, or, for example, a residents’ management company.
What is the Building Safety Act 2022?
- Higher-Risk Buildings
There is a new regulatory regime for “higher-risk buildings”, defined as buildings that are either at least 18 metres in height, or have at least seven storeys, and contain at least two residential units. Such buildings will need to have a designated “Accountable Person”, who will be responsible for ensuring that fire and structural safety is being properly managed for the whole building. “Accountable Person” is defined as a person or company with legal ownership of, or repairing rights in respect of, the common parts of a building. There could be more than one Accountable Person in some buildings, in which case there must be a “Principal Accountable Person” with overall responsibility. Each Accountable Person will still have responsibility for managing risks within the areas for which they are the Accountable Person. - The “Golden Thread”
Duty-holders are required to create and maintain a ‘golden thread’ of building information throughout the lifecycle of higher-risk buildings, including up-to-date safety information regarding the building design, build and management. Following the construction phase, Accountable Persons will become relevant duty-holders for this purpose. - protections for qualifying leaseholders from the costs associated with remediating historical building safety defects
- building owners will not legally be able to charge qualifying leaseholders (defined under the Act but including those living in their own homes and with no more than three UK properties in total) for any costs in circumstances where a building (in the majority of cases meaning those over five storeys or eleven metres tall) requires cladding to be removed or remediated
- qualifying leaseholders will also have robust protections from the costs associated with non-cladding defects, including interim measures like waking watches
- measures that will allow those responsible for building safety defects to be held to account
- timeframe for bringing claims under the Defective Premises Act 1972 (DPA, which requires the premises to be “unfit for habitation”) has been extended, in two main ways.
First, any claims under the DPA in relation to buildings completed after the Building Safety Act has come into force (which will be 28 June 2022 in respect of these provisions) can be commenced up to 15 years from the date of Practical Completion, rather than the standard 6 years.
And there is an a retrospective 30 year limitation period in respect of buildings completed prior to the Act coming into force - another important change is a new section 2A of the DPA which extends potential liability to refurbishment or extension works, whereas previously the DPA had applied only to new buildings.
- residents in high-rise buildings will have more say in how their building is kept safe and will be able to raise building safety concerns directly to the owners and managers of their buildings known as accountable persons and responsible for repairing the common parts of a higher-risk building, as defined in section 72 of the Act. The accountable person(s) will have a duty to listen to them. If residents feel their concerns are being ignored, they can raise them with the Building Safety Regulator.
- Section 38 of the Building Act 1984
- This provision allows a claim in respect of physical damage (such as injury or property damage) caused by a breach of building regulations (as at the time of construction). It had never previously been implemented, but will now come into force. Unlike the DPA, this provision will apply to all buildings, not just dwellings. As with the DPA, the limitation period will be 15 years; there is no corresponding 30 year retrospective limit.
- Building Liability Orders
potential joint and several liability for associated companies, such as parent companies, successor companies, or related group companies. It relates to claims under the DPA, section 38 of the Building Act, or claims which relate to a building safety risk. It is likely to come into play where the original developer has become insolvent, or was a special purpose vehicle without assets. - creates 3 new bodies to provide effective oversight of the new regime:
the Building Safety Regulator
the National Regulator of Construction Products and the New Homes Ombudsman.
