Managing Leasehold Property during the Coronavirus Crisis
This article has been compiled using information from the Institute of Residential Property Management (IRPM), Chartered Institute of Housing (CIH), Association of Residential Managing Agents (ARMA), legal professionals working in the sector as well as contractors and other property managers sharing their advice on social media, and is grouped as follows:
- First Tier Tribunal (FTT) Matters
- Court Hearings
- Qualifying Works (Section20)
- Government Support for Landlords & Renters
- Service charge recovery
- Repairs, Inspections & Maintenance
- Money Protection and Fraud Prevention
1. First Tier Tribunal, Property Chamber
The following has been announced:
- No further face to face hearings or mediation will take place until further notice
- For at least 6 months no inspections will be carried out by the Tribunal
- All cases listed until at least the end of May have been postponed
- Where a case has been heard and concluded or was due to be determined on consideration of papers alone then the Tribunal’s decision will be issued by post or email
- Remote hearings or considerations can only take place for urgent cases that have already been listed
2. The Courts
On the 30th of March 2020 there were 157 open courts for essential face to face hearings, 124 staffed courts for judges and staff to work from but not open to the public, and 89 suspended courts which will be temporarily closed.
3. Qualifying Works (Section 20)
The Government has released updated guidance to allow for unsafe cladding remediation works, and maintenance measures to ensure buildings are safe, can still go ahead.
“Employers should ensure their workers on-site are able to follow the public health guidance, and they should consider responsible arrangements for ensuring their workers can travel in line with this advice, such as through staggering site hours to reduce public transport use during peak periods.
It is, therefore, possible for construction work to continue in the current context. Those responsible for commissioning building safety work, such as the remediation of high-rise buildings with unsafe ACM cladding, and the construction companies undertaking the work, should consider how best to proceed and/or mitigate the risks arising from such work being paused.”
In general, construction sites have not been asked to close, and work can continue provided they comply with social distancing guidelines.
4. Government Support for Landlords & Renters
From 26th March 2020 landlords will have had to give all renters 3 months’ notice if they intend to seek possession of the property, after which if the tenant has not moved out they can then start the court process to evict. This provides new protections for renters and these measures will stay in place until at least 30th September 2020.
Landlords remain legally obligated to ensure properties meet the required standard and urgent, essential health and safety repairs should be made.
5. Service Charge Recovery
The lockdown has meant leaseholders unable to work, with many furloughed and others losing their jobs altogether. These extenuating circumstances should be considered, however, the consensus is that service charge monies are for the maintenance and repair of the property, and not doing so could present a health risk to residents or end up costing more in the long run.
At present there is a freeze on being able to pursue forfeiture of the lease however claims can still be issued online to obtain default judgements.
Unpaid service charges may be considered a breach of lease and a determination could be sought from the FTT accordingly.
There is mounting pressure for managing agents to negotiate payment holidays, deferred payments, or reduce the provision of services however this should only be considered in exceptional circumstances in order to minimise disruption, confusion and later disputes.
Service charge budgets may need to be revised to account for additional cleaning and sanitising and a lease should be reviewed to determine if reserve funds can be allocated to such expenditure.
6. Repairs, Inspections & Maintenance
Landlords are still under a legal obligation to keep their property in repair and ensure any necessary inspections of the property are performed but this must be balanced against the risk of infection or spread of the Coronavirus.
- Urgent, essential health and safety repairs should be made
- An agreement for non-urgent repairs to be done later should be made between tenants and landlords
In practical terms it means that urgent repairs can continue, as long as social distancing is respected, adding that no work should be carried out in any household which is isolating or where an individual is being shielded, unless it is to remedy a direct risk to the safety of the household such as emergency plumbing or repairs.
7. Money Protection and Fraud Prevention
It is prudent to understand where the greatest risks of fraud or error may present, such as processing invoices, handling client funds or receiving payments from leaseholders. Where payments or transactions take place online, and increasingly so due to remote working, ensure that these methods remain secure and mitigate any potential cyber security breaches.
Summary
The coronavirus crisis has presented an unprecedented challenge to everyone, nevertheless life goes on and the business of managing leasehold property does not stop. We have to adapt to these changed conditions with Property Managers working from home, Directors Meetings being held remotely using technology and much else. This article provides some guidance for the management of leasehold property under these exceptional circumstances.
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