Real Estate and Construction

Following the Grenfell Tower fire, the Government introduced the Building Safety Act 2022. This legislation introduced a selection of new fire safety regulations for high rise buildings.

In this post we will discuss these new fire safety regulations for high rise buildings, to help you ensure you stay compliant.

What Qualifies as a High Rise Buildings in the New Fire Safety Regulations?

If a building has seven storeys or more, or if it is at least 18 metres high, and if it has at least two residential units, then it is classed as a higher risk high rise building. As part of these new regulations, buildings that meet this criteria must be registered with the Building Safety Regulator (BSR).

Responsible Persons for High Rise Buildings

Under these new regulations, all high rise buildings must assign a responsible person to provide key information to Fire and Rescue Services. This information is intended to help the authorities effectively plan their response in the event of a fire.

Responsibilities of Responsible Persons

Under Fire Safety (England) Regulations 2022, responsible persons are required to:

• Provide local fire services with electronic building plans, along with details of external wall systems, specifying the building material used. They must also keep hard copies of these plans in secure information boxes.
• Install signage throughout the building to help firefighters find their way in the event of a fire.
• Conduct monthly checks of all onsite firefighting equipment, including any firefighting lifts.
• Immediately report any issues with any firefighting equipment to the local fire and rescue services.
• Undertake annual checks of all residential entrance doors, along with quarterly checks of all onsite fire doors in the building’s communal areas.

Responsible persons must also provide any residents in the building with relevant fire safety instructions, which includes information on the importance of fire doors. They should instruct residents on how to report a fire, and on the actions they should take once a fire has broken out, in line with the building’s evacuation strategy.

Floor Plans and Building Plans Requirements for High Rise Buildings

As we mentioned above, the responsible person in a high rise building must keep hard copies of the building’s plans in a secure information box, while also providing local emergency services with digital copies.

These building plans must specify which lifts in the building are to be used for evacuation, and which are to be used by firefighters. They must also highlight where all of the key firefighting equipment in the building is to be found. This should include specifying all inlets and outlets for dry-rising and wet-rising mains, along with the locations of any shut-off controls for sprinkler and smoke control systems.

Other Fire Safety Regulations For High Rise Buildings

In addition to these ongoing checks and reporting duties, responsible persons must undertake routine monthly checks of the following:

• Rising mains
• Smoke control systems
• Fire suppression systems, such as sprinklers
• Fire detection and fire alarm systems. This includes any systems that are linked to other fire safety equipment, including smoke control systems.
• Evacuation alert systems. Please note that the responsible person does not have to test the system itself each month, but they must perform a visual check of the control system and indicating equipment.
• Any automatic door opening or closing systems that are linked to the fire detection and alarm systems.

The responsible person must keep a record of all of these monthly checks, and all residents should be able to access these records on request.

Should the responsible person detect a fault in any of these systems, they must aim to rectify it within 24 hours of discovery. If this is not possible, they must notify the local fire and rescue services of the fault, before notifying them again once the fault has been addressed.

In the event of a fault, the responsible person should consider the potential impact, and implement temporary mitigation measures if necessary.

You can read a full guide to the ongoing responsibilities outlined by the regulations.

Get Dedicated Property Insurance Cover With James Hallam

If you are a property owner, developer or a building manager, then you have a legal obligation to ensure that all of these fire safety regulations are followed in any high risk high rise residential buildings in your portfolio.

If you do not comply with these regulations, you will face some harsh penalties, and potentially even prosecution. On top of this, if you fail to protect your property and your tenants against fire risks, it could also compromise your buildings insurance policy.

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. Talk to us, and we can help you ensure you have enough cover to protect your high rise property at a competitive price. We will also provide expert risk advice to help you meet all relevant fire safety regulations for your building.

Get in touch for a free quote today.

Chancellor Rachel Reeves recently caused controversy when it emerged that she had broken housing rules when renting out her family home. It seems she had failed to obtain a “selective” rental licence when renting out her London home.

This news prompted many to wonder about the specific rules for letting out property in the UK: Do you always need a landlord licence? And if not, when exactly do you need one?

What is a Landlord Licence?

A landlord licence is exactly what it sounds like: A document that gives you the legal right to let property in the UK.

The type of licence you need will depend on the type of property you are looking to let, as well as your location.

When Do I Need a Landlord Licence?

If you are letting property in Scotland or Northern Ireland, then you will need some form of licence or registration no matter what kind of property it is. In England and Wales, it all depends on what sort of property you want to let.

Types of Landlord Licences

Broadly speaking, there are three types of landlord licences:

• Mandatory HMO Licensing
• Additional Licensing
• Selective Licensing

What is Mandatory HMO Licensing?

An HMO is a House in Multiple Occupation. This is a situation where unrelated tenants live in the same property, with their own private rooms, while sharing facilities such as kitchens and bathrooms.

Since 2006, it has been a legal requirement in England and Wales to apply for an HMO Licence when letting out a property to five or more unrelated tenants. This applies to any property where these unrelated tenants form two or more households. And to get your licence, your property will have to meet all applicable HMO standards in terms of room sizes, safety measures, and so on.

Usually, an HMO licence will last for five years. But if the council has any particular concerns about your property, then your licence may be shorter. Depending on your specific location, and the specific size of your property, an HMO Licence may cost between £600 and £1,200.

What is Additional HMO Licensing?

As we mentioned above, it is a legal requirement in England and Wales to get an HMO Licence for any property let to five or more unrelated tenants who form two or more households. In some areas, local councils require you to get an HMO Licence for smaller shared houses too, where three or more unrelated tenants form more than one household in the same property.

Check your local council’s licensing laws to find out whether you will need a licence for your property, depending on its size and the number of tenants.

What is Selective Licensing for Landlords?

Some local councils designate areas where all privately rented homes require a licence. This is known as Selective Licensing, and councils usually introduce this measure to regulate the rental market in high-density neighbourhoods.

Depending on the council, a licence can cost between £400 and £900 per property. If you fail to get a licence, you may face a fine of up to £30,000. On top of this, the court may impose a Rent Repayment Order, which would require you to pay up to 12 months of rent back to your tenant.

How Do I Find Out If I Need a Landlord Licence?

As we have seen, if your property is based in Scotland or Northern Ireland, then you will likely need a licence to let any private property. In England and Wales, if you are renting out an HMO to more than five people, then you will certainly need a licence. But beyond that, it depends on your local council’s specific rules.

Head to your local council’s website, and look for their Housing or Private Renting section. Many councils have online tools where you can enter your property’s postcode, and they will instantly tell you if any Additional or Selective Licensing laws apply to your area.

If you are still in doubt, then contact your council directly.

Note that, even if you do not need a landlord licence for your property, you will still have to meet a number of legal responsibilities as a landlord.

Get the Cover You Need For Your Property

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your property.

Whether you let a single private property, or you have a portfolio of properties, we can help you get the specialist insurance you need as a landlord at a competitive price.

Find out how we can help you today.

If you are the director or the manager of a residential management company, then you will undertake certain legal responsibilities while carrying out your duties.

In this post, we will explore what these responsibilities are, along with some ideas on how you can ensure you stay compliant in your role.

What Does a Residential Management Company Director Do?

The director or a residential management company (RMC) or a right to manage (RTM) company is chiefly responsible for overseeing the daily operations of a property. This can include making key decisions about finances and governance, while also liaising with contractors, residents, owners, and other concerned parties.

How Many Managers or Directors Should a Property Have?

A property may have a single manager or director, or it might appoint a committee of multiple managers or directors, who will share the responsibilities between them. The company’s articles of association should specify the correct procedures for appointing managers or directors, and for challenging them or removing them when necessary.

Key Responsibilities of Residential Management Company Directors

Below we will outline some of the key responsibilities of a residential management company director, in turn.

Company Finances

The company’s director or manager is responsible for ensuring the company’s funds are properly managed, and allocated accordingly.

Key responsibilities may include:

• Budget planning and record keeping.
• Setting, collecting, and recording service charges.
• Holding all collected service charges in trust.
• Allocating budgets to maintain the property while enhancing its value.
• Maintaining and filing annual accounts, along with a confirmation statement, with Companies House.

Communal Area Maintenance

The company’s director or manager is responsible for overseeing the maintenance and development of all communal areas of the property. This means ensuring that they are clean, well-lit, and maintained to regulatory standards.

This may include:

• Entrance doors and hallways.
• Stairs, elevators, and fire escapes.
• Outdoor areas, including gardens, pathways, and car parks.
• Fencing and boundary walls.

Governance

The company’s director or manager will ensure that the property operates in compliance with all applicable leasehold regulations and legal requirements (Companies Act 2006). They must remain totally impartial. Among other things, this means they must not accept any benefits from any third parties as a result of their work.

Key responsibilities may include:

• Staying up to date with the legislative landscape, to ensure that there are no inadvertent breaches.
• Communicating all legislative requirements, along with any changes, with all relevant stakeholders.
• Hosting up to four directors’ meetings a year, along with an AGM.
• Representing the best interests of leaseholders when making decisions, setting charges, or allocating budgets.
• Creating a culture of transparency and impartiality in all communications and decision-making procedures. The director will also have a legal responsibility “to exercise reasonable care, skill, and diligence” in their role.
• Avoiding conflicts of interest – i.e. situations where the manager or director’s own interests may conflict with the company’s overall interests, such as appointing a contractor in which they have a financial interest.

Engagement and Communication

Finally, the company’s director or manager will liaise between any parties who may have a stake in the property. This may include leaseholders, residents, property owners, management teams, and contractors.

If conflicts arise, the director or manager may act as a mediator. And as we mentioned above, they have a legal duty to ensure that any decisions made or actions taken are in the best interests of the leaseholders.

Personal Liabilities For Residential Management Company Director

Just like any director for any other company, RMC and RTM directors can incur civil and criminal personal liability for their acts or omissions when running the company. Any failures, oversights, or breaches could result in prosecution, or in costly claims from leaseholders or other stakeholders.

The right insurance can cover you for these personal liabilities, along with any claims that may arise.

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your assets.

If you are a RMC or RTM manager or director, we can help you get the specialist cover you need at a competitive price. This can include dedicated Directors and Officers (D&O) or Management Liability insurance, to cover you for the unique risks you will face as a RMC or RTM director.

Find out how we can help you today.

If you are a freeholder, then you have certain legal responsibilities to your leaseholders. In this post we will outline your responsibilities as a freeholder, so you can ensure you stay compliant.

What Are My Responsibilities as a Freeholder?

Freeholders own a plot of land, along with any structures located on this land. You may choose to rent this property to leaseholders, and if you do so, you will take on certain legal responsibilities. These include:

• Repairs and maintenance of structures
• Keeping communal areas clean
• Keeping records
• Arranging insurance

In this post, we’ll expore each of these in more detail.

For more information about your legal obligations as a freeholder, see the Landlord and Tenants Act 1985 and the Landlord and Tenants Act 1987.

Repairs and Maintenance of Structures

The freeholder is generally responsible for maintaining the buildings on their land, while arranging for any necessary structural repairs. This will include the building’s roof and guttering, along with any communal areas such as hallways or staircases.

Freeholders may also be responsible for arranging interior and exterior painting and decorating. And whenever any works are carried out, the freeholder will be responsible for liaising with contractors.

Do Freeholders Have to Pay for Repairs?
Note that the freeholder is only responsible for arranging repairs. You do not necessarily have to pay for them. Some freeholders choose to pass on the cost of repairs to their leaseholders.

Keeping Communal Areas Clean

Your property may have numerous communal areas, including:

• stairways
• hallways
• lifts
• doors
• shared kitchens
• shared bathrooms
• shared living rooms

In any case, the freeholder is responsible for maintaining these communal areas, which includes keeping them clean in line with relevant health and safety regulations. Most freeholders will apply a service charge in order to fund this ongoing maintenance.

The freeholder will also be chiefly responsible for maintaining any outdoor areas, such as gardens and car parks.

Keeping Records

Freeholders are responsible for setting, collecting, and allocating ground rent and, as we mentioned above, service charges.

Leaseholders have a legal right to enquire about these charges, and they can challenge certain charges if they feel they are unfair.

With this in mind, freeholders should keep detailed records of how they calculate their charges, and how they spend them. They should outline these calculations in the leasing agreement, so that the leaseholder can approve of them. And they should deliver routine management reports to keep their leaseholders updated.

Arranging Insurance

Finally, as the owner of the structures on their property, the freeholder is responsible for arranging for building insurance.

Once again, the responsibility only extends to arranging for this cover. Many freeholders pass on the costs of the cover to their leaseholders.

Though as we mentioned above, freeholders must be transparent about their insurance arrangements. Leaseholders have a legal right to enquire about the cover they are paying for, and they can challenge the freeholder if they feel they are being charged too much.

Specialist Insurance Services For Freeholders From James Hallam

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who care about protecting your assets.

If you are a freeholder, we can help you get the specialist cover you need at a competitive price, whether you are leasing to private tenants or businesses.

Find out how we can help you today.

If you work in the construction industry, or if you are any kind of tradesperson, then it is important to understand the risk of tool theft.

In this post we will explore the scale of the tool theft problem in the UK, before sharing some tips for keeping your tools, and your business, safe.

What is the Scale of Tool Theft in the UK?

According to one insurer, tool theft occurs once every 17 minutes in England, Wales, and Northern Ireland. Other reports suggest that at least 110 tools are stolen every day across the UK.

Thieves do not just target construction sites and vans. They also target garages, storage lockups, and even private homes.

Most tool thefts occur at night, and tool thefts tend to increase by 20% throughout the winter months.

However, some tool thieves are so brazen that they will steal tools directly from tradespeople in broad daylight. One carpenter told the BBC that thieves threatened him and his family with violence if he called the police.

What Are The Most Common Areas for Tool Theft in the UK?

Analysis by LBC revealed that nearly half of all reported tool thefts occur in London. Other key hotspots for tool theft include Essex, West Yorkshire, the West Midlands, and Gwent.

Another report suggests that Cambridgeshire is the worst area for tool theft in the UK, followed by South Yorkshire, and Lancashire.

How Much Does Tool Theft Cost the Construction Industry?

One report estimated that tool theft has cost the UK construction industry around £2.8bn.

The Tradespeople Against Tool Theft report revealed that the average cost of an incident of tool theft is £4,470. Nearly 20% of tradespeople who have fallen victim to tool theft lost over £5,000 worth of tools.

How To Deal With and Prevent Tool Theft

• Brief your staff. If you manage a construction business, or a team of contractors, make sure that everyone understands the risks of tool theft, and the steps they can take to manage the issue.
• Take extra steps to secure your vehicle. Tool thieves seem most likely to steal tools from parked vans. Invest in extra security for your van, including extra locks, cameras, motion sensors, and location sensors.
• Take extra care at night. Do not keep tools in your vehicle overnight. Try and park in a well-lit area – ideally on your own driveway, with motion sensors, floodlights, and security cameras.
• Register your tools. Use a tool inventory app, such as the Tool Register, to keep track of all of your equipment. This way, if you are a victim of tool theft, you will immediately know the value of your loss, which can help with your insurance claim.
• Mark your tools. Consider applying forensic marking to your most valuable tools, such as with microdots, and labelling your tools as “registered” and “protected”. This might help deter thieves.

Are You and Your Business Covered For Tool Theft?

83% of the tradespeople surveyed for the Tradespeople Against Tool Theft report revealed that, at the time of the theft, they had no insurance in place to cover the loss of their tools. Plus, as tool thieves regularly steal tools from vehicles, 13% of respondents had to pay for vehicle repairs on top of the costs of their lost tools.

Getting the right cover will not prevent tool theft, but it can at least guarantee that, in the event of tool theft, you will be able to replace your tools and get back to work as soon as possible.

James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers. We can help you get the cover you need at a competitive price.

Get in touch to find out how we can help you.

The Leasehold and Freehold Reform Act 2024 received royal assent on 24 May 2024. This post will provide a brief overview of how this new legislation will affect insurance fees and commissions for managing agents, landlords, and freeholders.

Leasehold and Freehold Reform Act 2024 – What Does It Involve?

The Leasehold and Freehold Reform Act 2024 applies to England and Wales, and it is designed to “improve consumer choice and fairness in leasehold”.

The act aims to achieve this through:

• Making it easier and cheaper for leaseholders to extend their leases or buy their freeholds, whether they live in houses or flats.
• Increasing the standard lease extension term.
• Making moves to abolish, or significantly reduce, ground rent.
• Improving the transparency of service charges, administration charges, and buildings insurance commissions, while giving leaseholders a right to request information about all charges related to the management of their building.

You can read a full guide to the legislation, and its aims.

Open Consultation – Permitted Insurance Fees for Landlords, Freeholders, and Property Managing Agents

The legislation addressed certain longstanding concerns that some landlords, freeholders, and property management agents may be passing on the costs of arranging and managing insurance to their leaseholders, without necessarily justifying or accounting for the work they have undertaken.

In short, some freeholders have been forced to pay significant insurance costs, and have had no power to challenge these costs, or even to properly scrutinise them. There have also been concerns that these costs may include commissions and other financial benefits for landlords, freeholders, and property managing agents that have nothing to do with the services that are allegedly being provided.

The government has launched an open consultation to find solutions to these issues. The aim of the consultation is to ensure total fairness and transparency for any costs associated with the management and arrangement of insurance for leaseholders. Leaseholders should know exactly what they are getting for their money, and they should have the power to challenge any decisions they disagree with.

Insurance Fees for Landlords, Freeholders, and Property Managing Agents – The Current Situation

Landlords, freeholders, and property managing agents are responsible for getting the right insurance in place for the properties they own/manage. Freeholders and property managing agents will usually cover the costs associated with arranging this insurance through charging their leaseholders within their service charges.

It was common for landlords, freeholders, and property managing agents to use insurance brokers to arrange for the necessary property insurance. Brokers work on a commission or fee basis, and they may choose to renumerate landlords, freeholders, and property management agents through giving them a share of their income.

This consultation was launched due to concerns that the current arrangement incentivised landlords, freeholders, and property managing agents to work with insurance brokers that promised the highest commission/income. Such an arrangement would not necessarily provide leaseholders with the best value option.

Meanwhile, leaseholders would be obliged to pay for the entirety of their insurance premiums, which often included any commissions or fees that were shared between brokers and the landlords, freeholders, and property managing agents. Plus, the lack of transparency meant that leaseholders had no power to scrutinise or challenge any decisions made about the insurance they were paying for.

What Could Change Following The Consultation?

• Landlords, freeholders, and property managing agents will be banned from charging leaseholders any costs beyond a “permitted insurance fee.”
• Excluded costs are anything related to the arrangement or management of insurance, which includes broker commissions or fees.
• The consultation proposes secondary legislation to ensure that landlords, freeholders, and property managing agents would only be able to charge leaseholders for insurance services via a separate fee, rather than as part of a variable “service charge”. This would improve transparency, and leaseholders would have the right to scrutinise and challenge any fees they are charged under the provisions of the Landlord and Tenant Act 1985.

How Landlords, Freeholders, and Property Managing Agents Can Prepare For Change?

Are you a landlord, a freeholder, or a property managing agent? Are you wondering how you might prepare for this change?

It might help to get involved in the open consultation. As well as providing an opportunity to share your thoughts, the consultation also includes a number of questions for you to consider. These might help you understand the viability of your current arrangement, along with the steps you may need to take to make your practices more transparent.

If you have any concerns about the future procedure for securing the right insurance for the properties you manage, we are here to help. We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We are committed to getting you the cover you need at a price you can afford, all while delivering the best possible value for your leaseholders.

Get in touch for a free quote today.

Buildings insurance is vital for all businesses. If your business premises are not insured, then you may struggle to operate following fires, floods, and other incidents.

Yet who is responsible for arranging and paying for building insurance on commercial properties?

Whether you are a business owner, a leaseholder, or a freeholder, it can be confusing to determine your exact responsibilities when it comes to building insurance. So, in this post, we will answer some of the key questions that you might have regarding building insurance on commercial properties.

Who is responsible for arranging building insurance on commercial properties?

Apart from a few exceptions, the responsibility for arranging building insurance falls upon whomever legally owns the commercial property. If you are an owner-occupier, meaning your business owns your premises outright, then you will be responsible for arranging your building insurance, and paying for it, alongside the rest of your business insurance.

Who is responsible for building insurance if you rent your business premises?

What if your business is just one of a number of businesses to rent space in the same building? In this case, more often than not, the building’s owner, freeholder, or landlord will be responsible for ensuring there is adequate building insurance in place to cover their occupants against all possible risks.

In some instances, the terms of the lease may stipulate that the head lessee is responsible for arranging building insurance, rather than the freeholder, subject to the freeholder’s interest being noted on the policy.

Who is responsible for paying for building insurance on commercial properties?

The property owner, freeholder, or landlord will not necessarily pay for the insurance they arrange. They may instead choose to pass on the cost of cover to their tenants as part of their commercial lease agreement.

So, if you are a business owner renting your premises, you may still have to pay for buildings insurance, even if you are not responsible for arranging it yourself.

If you are the sole business occupying the premises, then you will pay for all of the cover. But if you are one of several businesses occupying the premises, then you will likely only pay for a proportion of the cover.

What does commercial building insurance cover?

In a commercial property, building insurance will cover the property’s internal and external structure, including all windows, doors, plumbing, electricals, stairwells, and so on. Typically, the insurance will provide cover for property damage – for any necessary repairs following fire, flood, subsistence, break-ins, and so on.

The commercial property insurance will typically not cover the building’s contents. So, if you are leasing office or warehouse space in a commercial property, you will almost certainly have to arrange for your own separate contents insurance policy, to cover your stock and equipment.

You will also have to arrange for certain additional forms of business insurance. This might include business interruption insurance, employer’s liability insurance, cyber insurance, and whatever else is necessary to cover your business for the various risks you face while conducting business.

How does commercial property insurance work when making a claim?

Consider the following example: There is a fire at the commercial property where your business is based. It causes significant damage, so it becomes necessary to make an insurance claim.

Whomever legally owns the building, whether this is an owner-occupier, or a third party landlord or freeholder, will be responsible for making a claim on the building insurance policy. This will cover the necessary repairs for any damage to the building’s structure, or its permanent fixtures and fittings.

Yet any businesses based in the building will have to make separate claims on their own policies to get the cover they need for destroyed or damaged stock or equipment, for business interruption, for loss of income, for temporary relocation, and so on.

This is why it is important that everyone involved in a commercial property leasing agreement fully understands their responsibilities in regard to insurance, and the steps they will need to take in the event of a claim.

Insurance claims in commercial properties can get complicated. But with good communication between tenants, freeholders, leaseholders, insurers, loss adjusters, and whomever else is involved in the claim, the process can proceed as smoothly as possible.

Have you got the right cover for your business or commercial property?

Whether you are a landlord, a leaseholder, a freeholder, or an owner-operator, we can help you make sure you have the right cover in place for your commercial property. As well as advising on your buildings insurance, we can also advise on the additional cover you might need to ensure you meet you are fully compliant and fully protected.

Find out more about our Real Estate Insurance and get in touch for a free quote today.