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COVID-19: The implications for the Residential Property Management Sector

There are many issues facing those in the residential property management sector during the Covid-19 pandemic.

Many in the sector are now also faced with the issues of what to do with any Tribunal applications and proceedings, and what about ongoing or planned major works consultations and projects?

Tribunal matters

COVID-19 guidance in relation to First Tier Tribunal (Property Chamber) cases (“FTT”)  has been released: see FTT Property Guidance for users during COVID-19 pandemic. The measures include:

  • For at least six months no inspections of premises or property will be carried out by the Tribunal
  • They will not be able to provide a full service, and have asked for email only communications
  • Final hearings listed up to the end of May will be postponed and re-listed, with the option of being carried out remotely or to be determined on documents alone. If such options are not appropriate there is no indication of when matters for hearing will be re-listed
  • Those with urgent cases already listed, or it is considered a hearing should be listed, must email the Tribunal setting out the reason for urgency and whether a remote hearing or documents only determination is needed.
  • Parties should seek to comply with existing Directions orders. However, delays in compliance will be expected. Existing directions may be reviewed in order to decide the case remotely or on consideration of documents alone. It is unlikely that review of such directions will commence for at least six weeks.
  • There may be a delay in the issuing of decisions already heard by the Tribunal.
  • Time limits for seeking permission to appeal have not changed but must be submitted by email.
  • Any new non-urgent applications must be made by email. It is likely they will not be dealt with for at least six weeks from receipt.

For future FTT matters, owners and managers will need to consider whether applications which were envisaged can be held in abeyance. Matters will inevitably be stayed, delayed and backlogged through the Tribunal system for the foreseeable future. If matters are not of an urgent nature, can they be settled or held off at present? Managers may be thanked by owners/occupiers for prioritising matters, such as the basic running of the building and health of its occupants during lock-down, and saving costs on matters which can be deferred. Having open dialogue with any tenants in financial difficulties, and discussing deferrals/payment plans or instalments, may help tenants whilst maintaining some cash flow for essential services. It may also help to reduce the size of arrears balances which tenants will need to deal with when normal life resumes.

Major works projects

Projects currently in progress, particularly those of an essential nature such as cladding replacement and fire safety projects, can and should still go ahead as detailed in current government guidance. See our further article on this for more details: Link to covid-19-and-essential-construction-work-remediation-of-cladding. However, these projects will no doubt face difficulties and delay. We are hearing that even if works are urgent and going ahead, contractors cannot get materials with many suppliers currently closed. If it becomes necessary to terminate ongoing projects, there will also be contractual issues to consider. See our further article on this for more details: Link to-the-impact-on-construction-contracts-and-property-developments

What about scheduled major works projects, with s20 consultation completed and service charge budgeted? Now is the time to consult with contractors as to whether it will still be possible for the works to commence and be carried out safely and in accordance with current government guidance, or whether to put a hold on the project. Delay of non-urgent works may be preferable to a part finished or disrupted project. Which option which will save costs in the long run? Consult with the tenants to keep them appraised of the options in relation to the project. Tenants may prefer to concentrate on social-distancing and self-isolation, whilst not living in the middle of a noisy or unfinished major works project. Check if there are suitable reserve fund provisions in the lease allowing the long term retention of funds already collected.

In due course, when the pandemic restrictions have subsided, it will need to be considered whether previous s.20 consultations and specifications can be resurrected without duplicating the process. Has the situation become one which would justify an application for dispensation of consultation requirements? (although bear in mind the backlog at the Tribunal for dealing with such applications may not make this a swifter option). A Notice of Intention is supposed to anticipate works starting within months as opposed to years. Hopefully Covid-19 will only cause delays of weeks or months so, as long as the specification and nature of the works is still the same, there should not be a need to consult again. We suspect that the Tribunals will give leeway on this where any delays are Covid-19 related. It may even be a good time for busy property managers to start consultation on major works projects that they have not had time to do before now, so as to have everything in place for Summer works.

On day to day maintenance matters Robert Jenrick, Secretary of State, confirmed on 25th March that work in people’s homes by contractors carrying out repairs and maintenance, fire safety and sanitation works can continue. Provided the tradesperson is well and has no symptoms and follows PHE guidelines, including maintaining a two-metre distance from any residents to ensure everyone’s safety, such work has not been curtailed. See current guidance here: Link to government guidance on work-carried-out-in-peoples-homes

Conclusion

The main message for property managers is to consider all options and consult clients and tenants. Urgent works may need to continue, whereas postponement of other projects may be better. Look at the preferred outcomes for owners and tenants, particularly in terms of costs saving now to assist cash flow in the short term. Open communication and engagement with tenants now may help to reduce time spent dealing with tenant complaints now, or in future when major works projects become feasible again.

For further advice on these, or any other, issues facing the residential property management sector please contact:

Helena Bannister helena.bannister@weightmans.com

Sian Evans sian.evans@weightmans.com

Charlotte Collins charlotte.collins@weightmans.com

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