Has anything changed since 2017?

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Carefully considered reform could really turn leaseholders into property owners


Back in 2017, following the last election, Christopher Howarth a senior researcher at the House of Commons set out ways in which leasehold reform could really turn leaseholders into property owners. The article resurfaced on Twitter last week. Two years down the line, we took another look at some of his points and today we're putting our own spin on them.

First, Christopher argues for separate trust bank accounts entitling leaseholders to have the money for their sinking fund and expenses kept in a separate account for which they could see the statements. A proposal to do this was passed by Parliament in 2002 (Leasehold Reform Act 2002 Section 156) but it was never brought into force.

Ringley is one of the few managing agents that have had separate trust bank accounts since 2000 and we may be the only one that invites the client to nominate one person who can receive a copy of the physical bank statement every month.   This is a huge additional administrative burden each month and means reconciling thousands of individual client bank accounts, hence the proposal was blocked. However, this is something we would like to see brought back by any future government to reduce the risk of money moving between properties, cross-subsiding landlords or simply disappearing.

Which leads us on to transparency. In 2017 Christopher wrote: "There is no reason why a leaseholder should not see key documents relating to the management of their property. Without transparency regarding statements and contracts, the ability to go to the Tribunal is practically worthless. With complex and partial information disclosed, a leaseholder will never be able to prove a case - a fact of which landlords are well aware".

We absolutely agree.  This is why we have more information online on the Ringley Gateway 24/7 than any other agent we know.  This includes bank balances, contractor invoices, quotes, risk documents, statements, copies of demands, arrears lists, subletting properties lists, cleaners and gardeners specifications and development plans. And we are now in the process of uploading CDM manuals too.

However, not all reform is good reform. One suggestion we don't support is changing the Tribunal costs system. The argument goes that going to Tribunal should either be cost-neutral, or allow both sides to claim costs.

We disagree. This is a misjudged suggestion because with the rise in enfranchisement many landlords are now hard-working people who do not have the funds of local authorities or major operators.  We have been witness to some extraordinarily vexatious cases where in truth the tenant ought to have paid all the costs!

Another big issue is the complexity surrounding enfranchisement and the right to manage. It is often argued that both processes should be made a lot easier. But 25 years in property management have taught Ringley Group managing director Mary-Anne Bowring that it is a mistake to assume that management is always better in the hands of the leaseholder.  "With the heightened alerts on fire and health and safety, we find that it is the professional landlords who are managing their blocks better - where reputation and safety matter more than means-testing works.  A lower threshold could lead to misuse of what is really quite robust legislation," she says.

Two years ago, Christopher also argued for placing the RICS code for managing agents on a statutory footing. While managing agents are supposed to follow best practice, legislating for this would have a positive effect on the sector and their clients, he wrote. 

At Ringley we work to the spirit of the code as our guiding principle. While we agree the code may not be enforceable in its own right, it draws heavily from legislation and is the first thing that property managers are cross-questioned on at Tribunal and sometimes in the courts.  The real question is what else needs legislating for? Lord Bests' work on the regulation of property agents should - hopefully - give us all some clarity in the near future.

Back in 2017, Christopher's verdict was that there is a big political prize to be had for improving the rights of millions of property owners and bringing them up to equality with those who own their own house. As we blogged last Thursday, we think he's absolutely right!

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02/09/2020
Author : Mary-Anne Bowring

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