A S Ramsay’s Group Director, Jamie Godman, looks at the new Block Management Sector Code and working with contractors.
In August 2021, a consultation was launched on a new Block Management Sector Code. It has been developed by the Royal Institution of Chartered Surveyors (RICS) along with The Property Ombudsman and an expert working group. The proposed Block Management Sector Code is specifically for agents and managing agents working in leasehold and commonhold property and estates of freehold houses.
The Block Management Sector Code is the latest step in developing an overarching framework for all residential property agents based on the recommendations made by Lord Best in the Regulation of Property Agents, Working Group Report and takes the principles set out in the Overarching Code and applies them to the conduct and behaviour of managing agents (as firms) and staff (as individuals).
The main focus for this code is to provide a framework for ethical and competent practice that is intended to provide clarity for consumers with regards to the role and responsibilities of managing agents.
The Code applies to:
- leasehold: property agents engaged in activities relating to the management of leasehold properties
- commonhold: property agents appointed by a commonhold association to carry out activities related to property management
- freehold estates: property agents engaged in activities relating to the management of freehold estates.
Working with contractors
When it comes to working with contractors, their appointment and administration, the Code outlines that the building or estate owner should normally be the principal/employer under any contract for carrying out works or supply services, not the managing agent.
When appointing a contractor, the Code also outlines the need for transparency such as declarations if you or your client have a connection with any proposed company, individual, contractor or supplier, whether financial or otherwise.
You must also ensure that any charges for specifying, tendering and monitoring contracts are pre-agreed with your clients and proportional to the tasks involved. You must also confirm, where possible, all appointments or reappointments by a written works order providing contractors with a ‘licence to work’.
Clients must have criteria in place for the selection of contractors prior to employing them and have a list of pre-selected, approved contractors for low-value or urgent works. In these cases, you should have agreed pricing mechanisms (e.g. hourly rates) and financial limits that are reviewed at appropriate intervals. You should be able to justify the fairness of expenditure to your client and have some process for market testing and ensuring value for money.
Clients should obtain competitive prices from a minimum of two selected contractors for larger works, and where the costs are to be included in leasehold service charges, at least one of the contractors must not be connected with the building or estate owner.
You must also clearly define the duties of the contractor, including expected response times. Where the costs are to be paid by leaseholders through service charges, ensure that all ‘qualifying works’ are fully consulted under Section 20 of the Landlord and Tenant Act 1985 (as amended) before the appointment of a contractor, or that dispensation has been granted (or carried out with the express instruction of the client after you have pointed out the risks of non-compliance with the above – s.20ZA is the section that applies in this instance).
You will also have to obtain a health and safety method statement from all contractors, as necessary, before entering into a contract and take reasonable steps to be satisfied that the proposed method(s) of work are safe and appropriate to the task in hand.
It is fair to say that the Code presents no major issues for A S Ramsay and we are well positioned to help all existing and new clients comply with the new Code when it comes into force.
Jamie Godman
Group Director
