the INSTITUTE OF RESIDENTIAL PROPERTY MANAGEMENT ... - IRPM

THE INSTITUTE OF RESIDENTIAL PROPERTY MANAGEMENT LTD November 2013 Technical Update

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Contents 1. IRPM news-exam dates, annual seminar date for 2014. 2. Media Reports- PRS announcement, model leasehold enquiries form. 3. HR news-warning about bring your own devices, flexible working patterns reduce absences. 4. Social housing news-planned curb on major works charges by councils, social housing sales, buy back plan to assist lessees. 5. Fire & Health and Safety News- 1,000 construction sites fail HSE safety checks, London fire brigade to charge more for non-emergency lift call outs. 6. Legal Reports- two new cases about RTMCos, subletting restriction clause upheld by UT. 7. News from Scotland- latest fire statistics, RICS sets up a commission to boost housing supply. 8. Topic of the Month-problems with gas and electricity bills for communal areas. 9. CPD Diary of training events

1. IRPM Diary Dates The next associate preparatory workshop will be held on 5th February 2014 Associate Exam - London & Manchester 04 March 2014 Member Exam - London & Birmingham 23 April 2014 Associate Exam - London & Birmingham 17 September 2014 Member Exam - London & Manchester 28 October 2014 The 2014 annual seminar will be held on the 13 th May.

2. Publications and Media Reports 2.1 Why Lessees Are In Arrears? Brady’s solicitors issued an interesting news piece about the six most common reasons given to them when lessees are in arrears. The most common reason was demand not received; I told you I’d moved… I didn’t receive it… You sent it to the wrong address…Sound familiar? You might cynically say that lessees always argue this as an easy excuse but it pays to check your records are up to date. The second most common reason was unhappy with the service provided. You can view Brady’s free Service Charge Best Practice webinar recorded with News on the Block at this link.

2.2 Government Announcements about the PRS in England The government made a series of proposals to improve the PRS in England n the 16th of October. This is a summary of the announcement.

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New regulations that will force letting and property management agents to join a compulsory redress scheme will appear soon. The second reading of the Private Landlords and Letting and Managing Agents (Regulation) Bill took place in the House of Commons in October. (This proposal was discussed with IRPM by government earlier this year.) The government will publish a new code of practice setting standards for the management of property in the private rented sector, with a view to making it statutory to provide greater confidence for tenants in what they can expect. A new tenant’s charter. The charter was issued in draft last week last week as a guidance note. The introduction of a model tenancy agreement which landlords can use to offer longer tenancies of 3 years or more, to provide extra security and stability for families. Extra guidance will be produced for local councils on how to protect tenants from illegal eviction, how to push for harsher penalties before magistrates for housing offences where these have a real impact on peoples’ lives, and to plan for new private rented developments in the future including on their own land.

You can read the full press release at this link: https://www.gov.uk/government/news/a-brighter-future-for-hardworking-tenants

2.3 Changes to Housing Ministers in England Mark Prisk is no longer housing minister. His role at the CLG has been taken by Kris Hopkins, Conservative MP for Keighley. Jack Dromey was also replaced as shadow housing minister by Emma Reynolds, MP for Wolverhampton North East.

2.4 Model Leasehold Enquiries Form Launched-England and Wales A standardised questionnaire has been created and endorsed by trade bodies. For the first time agreement has been reached between property trade bodies and the Law Society and the Society of Licensed Conveyancers on a model leasehold enquiries form. It is available for use by all parties involved in selling a leasehold property but of course it is optional. The new industry approved Leasehold Property Enquiries, Form LPE1, was developed by Move with Us in collaboration with The British Property Federation (BPF), The Society of Licensed Conveyancers (SLC), The Royal Institution of Chartered Surveyors (RICS), The Law Society, The Association of Residential Managing Agents (ARMA), The Association of Residential Letting Agents (ARLA) and The National Association of Estate Agents (NAEA, with the overall concept supported by The Council of Mortgage Lenders (CML) and The Building Societies Association (BSA).

2.5 ARMA Q Accreditation to Commence The annual conference of ARMA held on the 10th of October announced that entries for accreditation under the new regulatory regime known as ARMA Q will commence from 1st of November 2013 . An explanation of what is required is available at this link: http://arma.org.uk/managing-agents/arma-q-accreditation


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3. HR and Learning and Development News 3.1 Bring Your Own Device and Data Protection The Information Commissioner’s Office (ICO) has again warned organisations they must make sure that their data protection policies reflect how the modern workforce are using personal devices for work. In a press release it stated: “With a YouGov survey earlier this year showing that 47% of all UK employees now use their smartphone, tablet PC or other portable device for work purposes, there is a concern many organisations are failing to update their data protection policies to account for this growing trend.” It said that the warning comes after the Royal Veterinary College breached the Data Protection Act when a member of staff lost their camera, which included a memory card containing the passport images of six job applicants. ICO revealed that the incident occurred in December 2012 and that the organisation had no guidance in place explaining how personal information stored for work should be looked after on personal devices. ICO Head of Enforcement, Stephen Eckersley, said: “Organisations must be aware of how people are now storing and using personal information for work and the Royal Veterinary College failed to do this. It is clear that more and more people are now using a personal device, particularly their mobile phones and tablets, for work purposes so it is crucial employers are providing guidance and training to staff which covers this use.” He added: “We have published guidance on this growing trend, commonly known as Bring Your Own Device (BYOD), and we would urge all organisations to make sure they follow our recommendations by ensuring their data protection policies reflect the way many of us are now using personal devices for work.”

3.2 Employers adopt flexible approach to working patterns in effort to reduce absence levels The number of employers making changes to working patterns in a positive move to try and reduce long-term absence levels has increased by 20% in the last year alone, according to figures released today by the Chartered Institute of Personnel and Development (CIPD), the professional body for HR and people development. The annual CIPD/Simplyhealth Absence Management survey reveals that, after a small decrease reported in last year's survey, absence is back up to the levels observed in 2011 and 2010, at an average of 7.6 days per employee. Absence levels are highest in the public services sector (8.7 days per employee per year) and lowest in the manufacturing and production sector (6 days per employee per year). Absence levels tend to increase with organisation size, regardless of sector. With absence levels on the rise again, employers are attaching growing importance to making changes to working patterns and environments, as a means of managing long-term absence levels: 85% of employers reported that they had adjusted working patterns this year, compared to just 65% in last year's survey. What's more, amongst those organisations who shared their experiences with CIPD, over 70% report that introducing flexible working opportunities in the past year has had a positive impact on absence levels. The Institute Of Residential Property Management Ltd

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Overall, two-thirds of working time lost to absence is accounted for by short-term absences of up to seven days. A fifth is attributed to long-term absences (four weeks or more). There are, however, significant sector differences. Just under half of absence in the public sector is short term, compared with over three-quarters in the private sector. Smaller organisations attribute a higher proportion of their absence to short-term leave compared with larger organisations.

4. Social Housing News 4.1 New Curbs against Councils’ ‘Rip Off’ Repair Charges for Leaseholders This was the helpful headline of a press release from CLG in October about the charges that local authorities make for major repairs to leaseholders. Behind this rhetoric are proposals, which are still subject to consultation, that would limit councils that get government funding to help maintain their tenants’ homes to only charge leaseholders a maximum of £10,000 over a 5 year period for repairs, or £15,000 for those in London. Since there is little government funding available to councils for repairs this proposal would seem to have little impact except to give good press coverage for the minister involved. But it will undoubtedly mean that leaseholders of local authorities will raise more queries about the costs of major repairs and cause problems for those leasehold managers who are trying to carry out programmes of major works. The consultation document was published on the 7 th of October and you can read and respond by going to this link: https://www.gov.uk/government/consultations/protecting-local-authority-leaseholdersfrom-unreasonable-charges

4.2 Consultation on New Guidance about the Allocation of Social Housing New proposed statutory guidance for councils published on 14th October 2013 makes clear that only people with a well-established local residency or connection to an area can go on that council’s waiting list for social housing. Along with giving priority to local people, the guidance makes clear that councils are required to make an exception to members of the Armed Forces who apply for housing. You can read the consultation paper at this link: https://www.gov.uk/government/consultations/providing-social-housing-for-local-people

4.3 Sales of Social Housing 2012/13-England A report from CLG presents national statistics on the number of sales of existing social housing stock in England for 2012 to 2013. It includes information on sales by local authorities and private registered providers – not just local authorities-and includes other schemes and types of sale than the Right to Buy scheme. Key points from the report are: 

in 2012 to 2013 there were 16,659 sales of social housing dwellings, an increase of 72% compared to 2011 to 2012


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of these 16,659 sales, 6,739 were by local authorities (more than double the 2011 to 2012 figure) and 9,920 were by private registered providers (an increase of 51% compared to 2011 to 2012) local authorities sold 0.40% of their stock in 2012 to 2013, a similar percentage to private registered providers who sold 0.42% of their stock 50% of social housing sales in 2012 to 2013 were through the Right to Buy or Preserved Right to Buy schemes; this is an increase of 12 percentage points compared to 2011 to 2012 the average discount, as a percentage of market value, of Right to Buy local authority dwellings sold was 45% in 2012 to 2013; in 2011 to 2012 this figure was 27% the average discount, as a percentage of market value, of Right to Buy registered provider dwellings sold was 50% in 2012 to 2013; in 2011 to 2012 this figure was 31% You can read the full report at this link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/249316/S ocial_housing_sales_in_England_2012_to_2013_v.pdf

4.4 Subletting a Social Tenancy Becomes a Criminal Offence in England The Prevention of Social Housing Fraud Act came into force from 15 October 2013 and means anyone found guilty of committing tenancy fraud will face a fine and a custodial sentence of up to 2 years. Previously they faced little more than having to hand back the keys to a property they weren’t living in. It is estimated by government that around 100,000 social homes in England could be unlawfully occupied.

4.5 LB of Southwark Plan to Assist Lessees with Major Works Southwark Council plans to offer to buy the home of any of its 17,000 leaseholders struggling to find the cash for repair work. The council hopes to offer the leaseholder the opportunity to remain in the property as a tenant of the council, if legally allowed to do so. Southwark will fund the scheme with cash generated from right to buy sales. The council’s five-year £326 million housing investment programme will improve the value of homeowners’ properties but has led to repairs and maintenance charges of more than £20,000 for some leaseholders. A group of council homeowners, mainly elderly leaseholders, can no longer afford owner-occupation the council said, with up to 1,000 falling into this category. Southwark’s leaseholders do not pay into a sinking fund to cover large repair works. The scheme will focus on leaseholders at risk of defaulting on their mortgages as a result of the repair charges. The borough will also offer interest-free loans to leaseholders to cover repair costs, and give them the option to pay bills over a period of up to 27 years.

5. Fire Safety and Health and Safety News-UK Wide 5.1 London Fire Brigade to Charge More for Non-emergency Lift Call Outs London Fire Brigade announced on 1st of October that councils and businesses will face tough new penalties if they persistently call 999 to deal with non-emergency lift call outs. Under the new rules, the Brigade will recover £290 plus VAT from the owners of buildings


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and lifts for attending non-emergency lift call outs. The charge will be applied from the third occasion firefighters are called to the same building in a twelve month period. Since November 2009 firefighters have attended around 7,400 fewer lift releases a year, equivalent to £2 million of the Brigade’s time and resources. But new figures show that last year fire crews in London still attended a total of 6,430 lift rescues - around 17 each day. The Brigade still wants to be called when there is a genuine emergency but less than 1 per cent, just 57 of the nearly 6,500 lift rescues last year were medical cases. To highlight the problem the Brigade has released the top ten worst offenders for nonemergency calls to people stuck in lifts. The number one building was a block of flats on Thurlow Street in Walworth in south east London where last year firefighters were called once a fortnight to deal with somebody trapped inside a lift.

5.2 More than 1,000 construction sites fail HSE safety checks HSE Construction Inspectors recently carried out a major inspection and enforcement initiative targeting the refurbishment sector. During the nationwide campaign:  Inspectors visited 2,607 sites where refurbishment or repair work was taking place.  Inspectors found basic safety standards were not being met on 1,105 sites  On 644 sites, practices were so poor that enforcement action was necessary to protect workers  539 prohibition notices were served ordering dangerous practices to stop immediately  414 improvement notices were issued requiring standards to improve The most common problems identified included during site visits  failing to protect workers during activities at height,  exposure to harmful dust  inadequate welfare facilities. Check out the image gallery to see photographs taken by inspectors throughout the campaign.

5.3 Revised Guidance for Employing Young People HSE has issued updated and revised guidance on its website for anyone employing young people-up to the age of 18. Go to this link: http://www.hse.gov.uk/youngpeople/

5.4 RoSPA Occupational Safety and Health Congress This congress titled ‘Behind the scenes of safety excellence’ will take place on Wednesday, November 27, 2013 at 15 Hatfields, Chadwick Court, Southbank, London SE1 8DJ. It will consist of a programme of case studies. RoSPA's 2013 Congress delivers practical insight into real-life management situations - covering topics such as leadership, performance management and mental health. For more information go to this link: http://www.rospa.com/events/congress/


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5.5 New Slips and Trips Microsite HSE has launched a new look Slips and Trips microsite on the HSE website. The new site is designed to provide visitors with improved guidance and information. Click on the new Slips and Trips website to find out more.

5.6 Ladder Exchange Extended to 31st December 2013 It’s estimated that over two million ladders are in daily use in the UK, and with falls from height still one of the main causes of death and injury in the workplace, it’s vital that these ladders and stepladders are regularly inspected and safe to use. The annual Ladder Exchange, now run and managed by the Ladder Association, is your opportunity to exchange any dodgy, bent and broken ladders for safe, brand new ones. Simply take your old ladders to a participating partner near you and swap them at a discount. You get a new ladder at a concessionary price and everyone stays safe. And this year you’ve got an extra month to do it in. Go to this link: http://www.ladderexchange.org.uk/

6. Legal Reports-England and Wales 6.1 Sub-Letting Restriction Clauses in Leases It is often argued that clauses which restrict the sub-letting of flats by lessees may now be unenforceable. But in a recent case concerning a request for a lease extension the Upper Tribunal (Lands Chamber) has held that a clause in a lease requiring the leaseholder to “use the flat as a private dwelling for the lessee and his family and for no other purpose” precluded sub-letting the flat to a person who was not a member of the leaseholder’s own family. The lessee seeking to extend the lease wished the clause about letting to family to be varied as part of the grant of a new lease. The lessee argued that this clause should be interpreted as a requirement that the flat be used for no purpose other than as a private dwelling but that the words “for the lessee and his family” did not impose a further restriction on the persons entitled to use the flat and, accordingly, subletting of the flat for residential use was permitted. The Upper Tribunal held that the natural and ordinary meaning of the clause was that only the lessee, i.e. the person in whom the lease was vested for the time being, and his family, could use the flat and that their use of it must be as a private dwelling. The words “for the lessee and his family” were additional words of limitation which could not simply be ignored. The case is Burchell v Raj Properties Limited [2013] UKUT 0443 (LC), September 20, 2013

6.2 RTM Company Need Not Adopt the Model Articles The Upper Tribunal (Lands Chamber) has held that whether a company is a Right to Manage Company for the purposes of the Commonhold and Leasehold Reform Act 2002 is to be determined exclusively by reference to s.73 of the 2002 Act. The failure of the company to The Institute Of Residential Property Management Ltd

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adopt articles of association in the prescribed form (s.74) does not mean that it is not an RTM company. By s.73, 2002 Act, a company is an RTM company if it is a private company limited by guarantee and its articles of association state that its object, or one of its objects, is the acquisition and exercise of the right to manage the building. By s.74 an RTM company is required to adopt articles of association in the prescribed form (RTM Companies (Model Articles) (England) Regulations 2009, S.I. 2009/2767). The prescribed articles include a requirement for the name of the company to include the words “RTM Company Ltd”. HQ (Block 1) Action Management Company Ltd claimed to be an RTM company within the meaning of the 2002 Act. It served a claim notice on the landlord. The claim was opposed on the basis that the company was not an RTM company. Although it met the conditions in s.73, it was said that it did not comply with s.74 as it did not have the words “RTM Company Ltd” in its name and, accordingly, its articles of association were not in the prescribed form. The LVT held that it was only necessary to comply with s.73 in order to be an RTM company as it was only that section which contained the definition of RTM company. The admitted failure to comply with s.74 did not mean that the company was not an RTM company. The LVT granted permission to appeal. The Upper Tribunal dismissed an appeal. Whether a company was an RTM company was determined exclusively by s.73. The failure to comply with the prescribed articles of association did not affect that question. The case is Fairhold Mercury Ltd v HQ (Block 1) Action Management Company Ltd [2013] UKUT 487 (LC), October 10, 2013

6.3 RTM Company Must Demonstrate No Prejudice The Upper Tribunal (Lands Chamber) has held that, where an RTM company fails to comply with the requirements for serving a notice of invitation to participate (s.78 of the Commonhold and Leasehold Reform Act 2002), it is for the company to prove that the failure has not caused any prejudice. If the company is unable to do so, then the FTT (PC) should dismiss the application to acquire the right to manage. After establishing the RTM company, but before serving the notice of invitation to participate, one of the leaseholders in this block died. Despite this, she was listed as a member and director of the company. The RTM company sent out notices of invitation to participate but did not send one to the estate of the deceased leaseholder. The RTM company subsequently served a claim notice. The landlord served a counter-notice and contended that there had been a failure to comply with s.78 in respect of the deceased leaseholder. It was argued that, on her death, the lease had vested in either the executors of her will or the Public Trustee and that a notice of invitation to participate should have been served. The Upper Tribunal disagreed with the LVT. The LVT was wrong to find that the deceased remained a member and director of the company. The articles of the RTM company provided that membership was conditional on being a leaseholder. It followed that, on death, she ceased to be both a member and director. The landlord was also correct to say that the notice inviting participation should have been served on the executors or public trustee if no will. The Institute Of Residential Property Management Ltd

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It has been held before in the Upper Tribunal that a failure to comply with sections 78 and 79 does not necessarily invalidate the RTM process; the Tribunal must consider what prejudice has been caused by the failure: Avon Freeholds Ltd v Regent Court RTM Co Ltd [2013] UKUT 213 (LC). But it is up to the RTM company to produce evidence that there has been no prejudice. In this case the RTMCo produced no evidence before the then LVT and so the Upper Tribunal determined that the RTM company was not entitled to acquire the right to manage. The case is Assethold Ltd v 7 Sunny Gardens Road RTM Company Ltd [2013] UKUT 509 (LC), issued on October 21, 2013

7. News from Scotland 7.1 Latest Fire Statistics The number of house fires in Scotland has fallen to the lowest levels recorded by the Scottish Government. Statistics released in October show that house fires have reduced from 9,811 to 5,820, a drop of 41 per cent since records began in 1990. Provisional statistics released also show that 46 people died in fires in 2012-13, a drop of 23 per cent compared to 2011-12. During 2012-13, there were 1,801 dwelling fires; in 31 per cent of these there was no smoke alarm present and in 14 per cent there was a smoke alarm present but it did not operate. For the first time, the publication Fire Statistics Scotland 2012-13, also includes information on the main sources of ignition for all accidental house fires. Cooking appliances such as ovens accounted for the majority of non-fatal accidental house fires. Smokers’ materials and matches were the main source of ignition for fatal fires. Drink or drugs were suspected to be a factor in 16 per cent of accidental house fires, which is a slight decrease from the 17 per cent reported last year. Community Safety Minister Roseanna Cunningham said: “While the significant reduction in the number of people hurt or killed in fires is to be welcomed, every death is a tragedy and there are 46 families across Scotland who are without a loved one as a result of fires last year. It is crucial that we continue with vital education work to raise awareness of the dangers of alcohol and drugs, particularly while cooking, which the statistics show still contribute to far too many casualties. I also would encourage everyone to ensure they have working smoke alarms and check them regularly to ensure they are working properly.” The full statistical publication can be accessed at: http://www.scotland.gov.uk/stats/bulletins/01064

7.2 Scotland's Firefighters say "No" to strike action On the 10th of October it was announced that Scotland's firefighters had decided to vote against any strike action over reforms to their pensions. As far as the Fire Brigades Union (FBU) is concerned, the Scottish Government's proposals presented an attractive enough resolution to curtail any threat of industrial action.


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Talks in Scotland involving the FBU are ongoing in relation to decisions centred on reducing the number of control rooms from eight down to three

7.3 RICS Sets Up a Commission to Boost Housing Supply The Scottish housing sector has been invited to submit ideas to a new commission in order to help boost housing supply. The Royal Institution of Chartered Surveyors Scotland said it was responding to ‘little traction and unconvincing consumer confidence, coupled with an annual decline in new built homes for the fifth successive year’. A commission was announced to recommend ways of delivering homes and called for written evidence from property profession, the not-for-profit housing sector, investors, developers, stakeholders and public interest bodies. Tom Barclay, Chair of RICS Scotland and CEO of Clyde Valley Housing Association, will chair the commission, which will produce its report on 30 January 2014. If you would like to comment go to: http://www.rics.org/uk/the-profession/how-you-can-contribute/consultations/policyconsultations/rics-scotland-housing-commission-into-the-housing-challenge/call-forwritten-evidence---rics-scottish-housing-commission/

7.4 Renting Scotland Renting Scotland is a jointly funded website by the Scottish Government and Shelter Scotland. Shelter Scotland created and maintains the site. The website is an industry-wide information hub for both tenants and landlords in the private rented sector in Scotland. It was launched 1 May, 2013 to coincide with the Scottish Government’s Tenant Information Pack becoming mandatory for all private landlords to give to their tenants. Go to this link: https://rentingscotland.org/

8. News from Wales 8.1 Draft Budget for 2014/15 Plans The draft budget for 2014-15, setting out Welsh Government’s spending plans for the next two years, has been published. Highlights include:  Help to Buy Cymru Shared Equity Scheme - with funding of £140m (£69m in 2014-15 and £71m in 2015-16) that aims to contribute to a scheme which will create an investment of over £800m in an estimated 5,000 new build homes.  Affordable Housing Land Scheme –funding of £5m in 2014-15 for a new pilot scheme will provide loans to councils and RSLs to acquire land sites in order to accelerate the development of affordable housing schemes.  Social Housing Grant - £53.8m in 2014-15 to build new properties or renovate existing properties for affordable housing in Wales Additional capital of £20m for Social Housing Grant - £5m in 2014-15 and £15m in 2015-16, to provide smaller properties to help mitigate against the impact of Welfare Reform.

8.2 Welsh Housing Review Published The annual review of Welsh Housing from CIH Cymru with a concentration on social housing issues has been issued. Some key statistics in it are: The Institute Of Residential Property Management Ltd

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The total population of Wales grew by 153,000 from 2001-2011, reaching 3 million for the first time since records began. Wales awaits its first Housing Bill in autumn 2013, with a separate Tenancy Reform Bill to be introduced in 2015. In Wales average house prices from April-June 2013 are a national average of £150k, a 1.5% reduction on the annual figure a year earlier. Yet average wage income is approximately £20k; a house price to income ratio of 7.5:1. Over the last decade, the private rented sector has grown both proportionately, mostly at the cost of owner occupation levels, and in absolute numbers, both in Wales and across the UK. The 2011 census indicates that 14% of Welsh households are resident in the private rented sector. This proportion is predicted to reach 20% by 2020. The Renting Homes Bill currently with the National Assembly aims to provide a new legal framework for renting a home. Taking its lead from the Law Commission’s proposals is the replacement of various statutory provisions, common law rules and multiple tenancy types with two regulated written tenancy agreements to be used by all rental providers; • A “secure contract” based on current local authority tenancy agreements that will be used for all types of ‘social housing’ in Wales; for housing association and local authority tenancies. • A “standard periodic contract” based on the “assured shorthold tenancy” used mainly in the private rented sector. The new contracts will be written in plain language and will cover all relevant law, ensuring equality and flexibility across the rented housing The Housing Bill contains proposals to establish a national, mandatory registration & licensing scheme to regulate landlords, lettings and management agents in the PRS called “Welsh Agents and Landlords Licensing Scheme” (WALLS ). Landlords and agents will be required to register, for a proposed fee of £50, adhere to a code of practice and pass a ‘fit and proper person test’

9. Topic of the Month - Problems with Gas and Electricity Supplies for Common Areas Increases in Tariffs Announced Yes it is that time of year again. The time when shock is widespread at the fact that gas and electricity price increases are announced. Here are some common problems for managers who deal with supplies to common parts to assist you in dealing with queries.

These are commercial supplies Supplies to communal areas of blocks of flats are classed as commercial supplies by OFGEM (the regulator) not as domestic. This question has been appealed to OFGEM, consulted upon, considered at length but confirmed by OFGEM as not domestic. So different rules apply to these supplies; the same as for any other small business.


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Suppliers make credit checks on agents and resident management companies (in England and Wales) and may refuse to supply if an RMCo is recorded as dormant or has no assets. Suppliers demand large deposits or direct debit payments before supply. In England and Wales where service charge monies are held in trust it is not practical to allow direct debits on service charge bank accounts. Where commercial contracts are negotiated they often have meant customers are only allowed to give notice to terminate their contract at a specific time (for example in a certain month). This reduces the ability of customers to negotiate and switch to better rates. And if you fail to terminate correctly suppliers may use automatic rollover contracts. The customer is bounced onto a rollover contract for 12 months at a punitive tariff. As a commercial supply you can have the supply disconnected for late or nonpayment. The protections afforded to domestic customers before disconnection do not apply to supplies to common areas. Back-billing happens when suppliers do not bill a customer for some time but then issue a bill for energy that has been consumed but not previously billed. Domestic customers have had protections against this practice for some time but not businesses.

Credit Checking and Dormant Companies Managers working for RMCos are usually advised to put the supplies in the name of those companies, not the manager’s company. But by doing so these small companies, often with no assets, are seeking supplies as small businesses and will be subject to credit checks if they try to switch for a better deal. They may be asked for large deposits before a switch or to sign up for direct debit payments in advance; making for cash flow problems. There are no easy answers to these problems but here are some tips.  Do not register RMCos as dormant companies at Companies House. Use the category set up by Companies House titled ‘flat management companies’.  Do not file the statutory accounts for RMCos as dormant at Companies House. (As a separate subject the Financial Reporting Council that sets standards for accountants in UK has come quite clearly to the view that the statutory accounts of RMCos are not dormant in its recent paper reference FRED50.)  Use an energy broker. Sometimes the right broker with a good track record with suppliers can obtain new rates for RMCos without the worries over credit checks.

Contract Termination Dates To give businesses more time to compare deals, OFGEM has announced that suppliers must accept a termination notice from a business at any time before the end date on the contract. This change will come into effect at the end of March 2014. From March 2014 suppliers will also be required to put the contract end date on all bills for small businesses. This will ensure these businesses know exactly when they should start comparing other offers in the market so that if they want to switch they could be ready to do so when their contract ends. The Institute Of Residential Property Management Ltd

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Automatic Rollover of Contracts Ofgem is reviewing whether automatic rollover of contracts for small and medium sized businesses should be banned altogether. Ofgem expects to consult on its preferred option before the end of this year and reach a conclusion by the end of winter 2013/2014. Some of the large suppliers have announced they will no longer use automatic-rollovers.

Disconnection of Supply A protocol was agreed between the big 6 suppliers and ARMA in 2011 to set out good practice if supplies to common areas of flats were to be subject of disconnection. This protocol can be used for any block of flats in UK. The protocol for example states that: “All energy suppliers only use disconnection as a last resort. Suppliers will make every effort to contact the landlord, before resorting to disconnection. Prior to disconnection the landlord will typically have received: · 6 attempts to contact through correspondence · 1 attempt by telephone · 1 attempt to contact by personal visit to the property · 1 attempt to contact by visit to court · A final attempt at warrant execution The last four of these steps will always be taken, even if there has been prior contact. During this process the supplier will also attempt to establish and consider the impact on the residents and what action may be taken to mitigate this.”

Back-billing Ofgem has made it clear that it wants to see all suppliers cutting back-billing to just one year, where the supplier is at fault. A number of suppliers have taken steps forward in this area. For example Scottish Power’s promise is currently no more than 2 years and reducing to 1 year in 2014. More information on what each of the major suppliers has promised is available at this link: supplier back billing can be found on the consumer futures website. BUT this will only apply if the customer has acted in a reasonable manner. The code adopted by suppliers also sets out what you, the customer, must have done to avoid a large backbill; what the suppliers consider as all reasonable steps to avoid a backbill. So the code gives the suppliers’ a lot of ways to pass some of the blame on to you and so argue that the period for backbilling may be longer. For example the customer must: “Give regular meter readings - Energy suppliers must take all reasonable steps to read the meter at least every two years but registering correct meter readings over the phone or online every time you get a bill will help your supplier bill you accurately. Enable meter readings – Help your energy supplier by making sure you provide access to meters in order to conduct readings. If you think you’re paying an incorrect amount, contact your supplier as soon as possible – Fixing the problem early on will avoid building up debt that is harder to pay off. If you are not sure if you are paying too much or too little, call your energy supplier who can help you to understand your energy use. If you receive a big bill, call your supplier straight away – Ask them to talk you through it. Your Supplier may well be able to help, for example through allowing you to negotiate repayments you can manage.” The Institute Of Residential Property Management Ltd

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Here is the link to the full version of the code: http://www.energy-uk.org.uk/publication/finish/43-code-of-practice-for-accurate-bills/467voluntary-standards-for-back-billing-microbusiness-energy-customers.html

Utility Brokers Many agents have started to use energy brokers and have achieved success in negotiating better rates for supplies to common parts. However there has been no regulation or set of standards about how brokers operate and of how they work with certain suppliers. For example brokers do not need to declare what commission they receive from suppliers. Ofgem has made clear that it will address the problem of rogue brokers that are misselling energy to businesses. It has already made the case to Government for more powers in this area. It is working with brokers and suppliers to set up an industry-wide code of practice for brokers. This code will set out that brokers have to behave in a fair and transparent way to give businesses confidence when using their services. The Association of Energy Brokers was formed in 2011 to serve as a focal point for organisations with business interests in the Commercial Energy industry. Membership is open to all suppliers, brokers and consultants involved in the industry. It has a code of ethics. Go to this link: http://www.energybrokers.org.uk/

10. CPD Diary IRPM The next associate preparatory workshop will be held on 5th February 2014 Associate Exam - London & Manchester 04 March 2014 Member Exam - London & Birmingham 23 April 2014 Associate Exam - London & Birmingham 17 September 2014 Member Exam - London & Manchester 28 October 2014 ARMA http://arma.org.uk/training-events/training-courses?offset=all Who's afraid of the LVT (First Tier Tribunal (Property Chamber))? London 06/11/2013 The Procedural and Technical Issues of Section 20 London 13/11/2013 Residential Service Charge Accounts Guidance London 21/11/13 LEASE To book LEASE events go to: http://shop.lease-advice.org/ Day courses Lease Extension of Flats – Birmingham Thursday 14 November 2013 Webinars Case law update 2013 27 November 2013 at 13:00


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BRETHERTONS WEBINARS To book Brethertons’ webinars go to this link: http://www.brethertons.co.uk/Home/News-and-Events/Events-and-Webinars.aspx Training your staff for Mediation Date: 19 November 2013 Time 12.30pm - 1.30pm Insolvency in a Nutshell - What to do if your debtors go bust? 27 November 2013 RTMs - the Pitfalls Date: 20 November 2013 Time 12.30pm - 1.30pm Applications to Appoint a Manager Date: 4 December 2013 Time 12.30pm - 1.30pm Employer's Liability for the Christmas Party Date: 5 December 2013 Time 12.30pm - 1.30pm

NAEA/ARLA To book the following NAEA/ARLA courses go to: http://www.arla.co.uk/training-courses/block-management-courses/ Basic legal practice for block managers-advanced 6th November London Essential procedures for block management part 1 14th November London Essential procedures for block management part 2 27 November London Essential procedures for block management part 3 3rd December London

CIH (Click on links for more information) Recent legal developments in service charge disputes 4 November 2013, Manchester Right to buy policy and practice - 13 November - Manchester Recent legal developments in service charge disputes 19 November 2013, Cardiff Right to buy policy and practice 28 November 2013, Birmingham/Solihull Recent legal developments in service charge disputes 3 December 2013, London Right to buy policy and practice 11 December 2013, London Right to buy policy and practice 22 January 2014, London How the Private Rented Sector is changing and its place in the UK housing market 4 December, CIH London Office 11 December 2013, Manchester;


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RICS (Open to non-RICS members, click on links for details) Fire Risk Assessment (1 Day)› London, 13 Nov 2013 Fundamentals of Managing Asbestos (1 Day)› London, 27 Nov 2013 Land Registration (Scotland) Act 2012› Edinburgh, 3 Dec 2013 Land Registration (Scotland) Act 2012› Glasgow, 11 Dec 2013 Legal issues and case law in neighbourhood disputes› Bristol, 3 Dec 2013; Cambridge, 12 Nov 2013; Cardiff, 4 Dec 2013; Newcastle, 12 Nov 2013 RICS Scotland Residential Conference 2014› Conference Dunblane, 30 Jan 2014
