PROPOSED ACCREDITATION SCHEME FOR PROPERTY MANAGERS
MEETING OF STAKEHOLDERS' WORKING GROUP
HELD ON 17 SEPTEMBER 2009 AT THISTLE HOUSE,
91 HAYMARKET TERRACE, EDINBURGH
NOTE OF MEETING
1. APOLOGIES
A list of those who attended is attached at Annex A. Apologies had been received from Colin Baxter, Kyla Brand, Pamela Kellock-Shetty, Lorraine MacDonald, Alison McDiarmid, Natalie Sutherland and Jennifer Wallace.
2. MEETING HELD ON 20 AUGUST 2009
A note of the meeting held on 20 August was approved subject to the following amendments:
Page 5: final para, first sentence - further meeting of the standards sub-group to include Consumer Focus Scotland.
Page 5: final para, last sentence - to be revised to 'The next stage in considering the core standards will be to explore their applicability to land maintenance companies (including the land ownership model).'
Matters arising
a. Consumer protection and pre-payments
DW reported that Consumer Focus (UK) had published the discussion paper 'Pay Now, Pay Later' in which it analysed the adequacy of the current safety net for consumers making advance payments for goods and services. The Consumer White Paper commits the UK Government to reassessing the regulatory framework surrounding prepayments and the paper contains the following recommendations for the Government on measures to enhance consumer protection:
1. Consumers should be given priority in the ranking of creditors when a company goes into liquidation.
2. The Secretary of State should be given reserve powers to require businesses in defined sectors to establish means to protect prepayments.
3. Harmonise redress upwards to same level as for card payments.
4. Revise the Insolvency Act 1986 to facilitate its greater use.
5. Enhanced duties on company directors to ensure that prepayments made by consumers are not used for purposes unrelated to those for which they were originally paid.
6. There should be targeted interventions in the furniture, electrical goods and travel sectors.
Stakeholder discussions are still ongoing, and it is not yet known whether all of the recommendations will be adopted in the new legislation. However the recommendations were welcomed by the working group and it was agreed that they should be taken into consideration (where appropriate) when designing the accreditation scheme. Recommendation 5 is the most relevant and it was recognised that it might be a potential addition to the standards, particularly because of its applicability to the use of floats.
LDM raised the possibility of running a test case relating to recommendation 5 in the context of the use of floats.
b. Online learning materials for property managers
RH reported a meeting on 3 September with Tim Pogson, Head of Asset Skills Scotland, to discuss a proposal to make learning materials for qualifications of the Institute of Residential Property Managers (IRPM) available as a regularly updated online resource. The proposal had been developed with the involvement and agreement of IRPM, PMAS, the Association of Residential Letting Agents, RICS and CIH. At that meeting it had been agreed that Mr Pogson would prepare a costed proposal for consideration at the next meeting of the working group.
c. Consumer engagement strategy
JW will prepare a paper for the next meeting of the working group.
d. Scheme viability
DM reported back on his approach to local authorities (LAs) about their understanding of the property management market in their areas. Of the 15 who responded to the letter, 5 provided useful information (suggesting around 17/18 firms in addition to PMAS members), 5 were unclear about the definition of property management and 5 said they had no property managers operating in their areas. The accuracy of the last group was doubtful as some of the areas were known to have PMAS members based or operating within them.
SG reported on the potential for housing association membership:
· of the 257 registered housing associations, 115 are involved in providing property management services.
· the degree of involvement varies considerably from those who provide services to a very small number of owners to others who market their services actively to the owners of housing outwith the social sector.
· 80-90 housing associations might be potential members of the accreditation scheme, but likely that many would not give an indication before details of the requirements and membership fees are available.
· property management is not a very profitable activity for housing associations, but it does bring other benefits and SFHA is now highlighting the business opportunity and social benefits associated with the provision of property management services.
· the Scottish Housing Regulator (SHR) could potentially play an important role in encouraging membership - irrespective of whether property management is a focus of their inspections.
RH said that he would discuss with PKS the possible role for SHR in promoting the principle of membership of the accreditation scheme.
The following points also arose in discussion:
· LAs who include factoring provisions in the title deeds of Right-to-Buy properties tend to be more pro-active in providing property management services.
· LAs consider the management of their own housing stock as their priority and many see their services to private owners as an incidental part of this task. Some are therefore reluctant to label the services provided to private owners as property management in case this creates expectations which the council is unable to meet.
· Some social landlords may be acting simply as one of the joint owners in co-ordinating repairs, without any legal relationship or legal obligation to the other private owners. An important distinction should therefore be made between the social landlord acting in this capacity and the social landlord acting as a factor providing a property management service.
· Important that social landlords clarify to private owners the type of service they are providing so that owners know what to expect. If the social landlord is acting in the capacity of factor, the service should meet certain standards.
· LAs are unlikely to make a business choice to market property management services due to other competing priorities (City of Edinburgh Council does not include factoring clause in its title deeds for Right-to-Buy). Also the prospect of regulation of property managers may discourage LAs from developing their factoring services.
· Social landlords need to work in co-operation with private owners if they are to meet the Scottish Housing Quality Standard by 2015.
· Some of the criticism (including the OFT report) directed at the of the factoring services provided by social landlords, might reflect a lack of understanding of the different types of factoring provided (a lack of factoring rather than bad factoring in some cases).
· The threat of losing control of the management of a building should be an additional incentive for social landlords to provide proactive factoring services.
Both DM and SG will develop their analyses further. In particular DM will ask LAs to clarify the nature of their existing factoring services to private owners.
In concluding the discussion, RH commented that the pool of potential members is small and it will be essential that as many as possible are encouraged to join the scheme.
3. STANDARDS
a. Meeting with the Greenbelt Group
RH reported on a meeting held on 16 September with Alex Middleton, Chief Executive of the Greenbelt Group, and Leslie Scott representing Greenhome (Greenbelt's property management arm). Also present at the meeting were LMacD, RH, SK and Joan Cubie (from the Scottish Government's Property Law team).
The main purpose of the meeting had been to establish whether the draft core standards for the accreditation scheme would be relevant and appropriate to the business model operated by land-owning Land Maintenance Companies (LMCs) of which the Greenbelt Group was an example. Version 6 of the draft core standards had been circulated in advance of the meeting and Mr Middleton confirmed that the standards were suitable for the land ownership model operated by Greenbelt and there were no proposed standards that Greenbelt could not engage with. Mr Scott confirmed that the standards were also appropriate to Greenhome.
It was noted that Greenbelt has published a 'Consumer Choice' document online which sets out options for owners wishing to make their own arrangements for the management and maintenance of open space land either by utilising the provisions of the Title Conditions (Scotland) Act 2003 or entering into a lease agreement. The document also outlines the option of transferring ownership of the land (including all liabilities) to owners, although it states that this would require unanimous support from all owners and requests would be considered by Greenbelt on a case-by-case basis.
In the subsequent discussion DW raised the following points:
· he questioned whether the scheme standards could be met by land-owning LMCs, as a company using this business model had argued in court that its relationship with homeowners was based on a community burden and was not a contractual relationship. Under these circumstances he considered that land-owning LMCs would not be eligible to join the accreditation scheme because the scheme's standards specify that a property manager must have a written contractual agreement with their clients.
· markets work better for consumers where they will switch if not satisfied with their supplier. DW considered that the land-owning LMC business model requires consumers to pay a specified company in perpetuity and was therefore at odds with this principle. He questioned the ability of companies employing this business model to meet the standard requiring property managers to provide clear details of how to terminate the service contract. He highlighted that this is an extremely complex legal issue, which the test case being supported by Consumer Focus Scotland will seek to provide an answer to.
· he considered that standards of service could not be separated from the business model and that in accrediting a company the scheme would not only be accrediting the services that the company provides but would also be accrediting the company's business model.
RH commented that the role of the scheme to accredit the standard of service provided rather than the business model. Greenbelt claimed that they have a voluntary arrangement with homeowners to allow switching, suggesting the issue of switching should not prevent the company from joining the scheme as long as it was able to provide details of the procedures for terminating the contract, as required under the standards of accreditation.
LDM considered that in Scots law a contract did exist between Greenbelt and homeowners due simply to the existence of the burden in the title deeds where the owner was bound to pay a third party (Greenbelt). Where the owner did actually make a payment and Greenbelt provided a service this would be further evidence of the existence of the contractual relationship.
During discussion the majority of those present supported the view that accreditation is about the standard of the service provided and homeowners should not be denied the protection of the scheme and the redress system where the property manager is prepared to meet the scheme standards. Standard 8 will require property managers to set out in writing the terms and conditions and service delivery standards of the contract and should reflect any voluntary arrangement such as that indicated by Greenbelt (adjustments to this standard were agreed - see below).
SK commented that OFT, in its report on property managers, recommended that accreditation should cover LMCs although it was not clear whether this was intended to include the ownership LMC model (post-meeting note: e-mail dated 30.3.09 from Pete Lukacs of OFT to Roger Harris confirms that OFT took the view that there were sufficient similarities between land maintenance and property management that they could both be covered under the same self-regulatory structure and it was not OFT's intention to differentiate between the two types of LMC in making its recommendations for either a voluntary scheme or a statutory scheme. If a LMC is willing to sign up to a scheme and adhere to its principles, OFT do not see why they should be excluded and they advised caution in making the scheme standards so specific that they eliminate diversity of business model.)
DW commented that if land-owning LMCs were permitted to join the scheme in advance of the outcome of the test case, this could result in negative publicity which could be damaging to the reputation of the accreditation scheme. On behalf of Consumer Focus Scotland DW requested that his disagreement with the majority view, that ownership LMCs should be permitted to join the scheme, should be recorded.
b. Core standards (Draft 6)
RH reported that LMacD and AMcD had agreed to jointly consider options for dealing with client accounts, particularly focusing on the problems faced by property managers who provide services to a large number of buildings and the need to clarify and agree terminology to describe the different types of account. The conclusions arising from their discussions will be taken on board in finalising the core standards (Standards 13 and 14 in particular).
The following additional revisions were agreed in the discussions which followed:
Standard 13a: add 'or a specific project' after 'cyclical maintenance fund'.
Standard 13b: add 'unallocated' before 'advance payments'.
Standard 14: revise to 'Interest earned on client money belongs to the particular account that has earned it.'
Standard 7: revise to 'When requested the property manager must assist the client to locate any absent co-owners, subject to any relevant legislation.' Guidance required on relevant (data protection) legislation and to clarify what is meant by 'assist'.
Standard 2: as requested at the previous meeting, SK reported on the following investigations relating to the provision of translations:
· Legislative requirements/Scottish Government policy: the Scottish Government's Equality Unit advised that each case should be considered on its own merit. While public bodies need to ensure that they are meeting their legal duty under race relations legislation in ensuring access to information for everyone, this should not be taken to mean that all information is necessarily translated into a wide range of languages. They advised that as with everything under this legislation, proportionality is the key in its application. The Unit recommends that a summary of the document is translated if appropriate (on request rather than proactively) and alternatives considered where this approach is not appropriate - such as the use of an interpreter to provide information to a group of people.
· The approach taken by Landlord Accreditation Scotland: LAS standards state that 'All information provided by the landlord, including the tenancy agreement, should be written in plain English. Where requested, the landlord should provide summary translations of written information in relevant minority languages, Braille or large print.' To date LAS has not received any requests for translations, but a number of local authorities have said that they are prepared to provide landlords with translations of leases in different languages.
· The cost of obtaining translations: the Scottish Government had obtained the following estimate for a full translation of the current version of the core standards:
Braille: £57 (no VAT)
Urdu, Hindi or Polish: £392 (inc VAT) each
The working group identified cost as an issue as this might act as a deterrent to membership. It was noted that while LAS had received no requests for translations, property manager/client correspondence differed from landlord/tenant correspondence in that the former involved an ongoing dialogue relating to financial obligations. While the working group agreed that a summary translation of the initial contract should be provided on request, the position regarding subsequent correspondence was not so clear. It was also suggested that there was a possibility that the frequency of requests for translations might be reflected in the level of fees charged by property managers. The working group felt that there was a role for the host organisation in minimising the cost to members of the scheme, for example by arranging for translations, negotiating discounted rates or establishing arrangements with community groups who might be prepared to translate documents or provide interpreters.
It was agreed that Standard 2 should be revised as follows: 'Where requested, the property manager must provide free summary translations of key written information in minority languages, Braille or large print.' Guidance will be required to clarify what is meant by 'key' documents; how to go about obtaining a translation; the role of the host organisation and signposting to further assistance.
Standard 8:
1st sentence - should state explicitly that a written statement setting out the contractual arrangement agreed between the property manager and client must be provided.
2nd bullet - add 'for increasing or decreasing charges.'
8th bullet - revise to 'Guidance required to explain that this is the property manager's understanding of the basis of appointment based on the title deeds and owners may wish to consult a solicitor for their own information or confirmation.'
Standard 28: replace 'Where possible' with 'Where appropriate'. Guidance to specify cost threshold above which collateral warranty will be appropriate.
Standard 29: revise to 'Property managers must have a procedure in place to give contractors access to the property in order to carry out emergency repairs, although the procedure may state that access might not always be possible.'
Standard 32: add 'agreed by all the owners.' The working group considered that it was important to be flexible in respect of other agreed factoring arrangements, particularly where the titles are unclear or do not make provisions. However guidance should be provided to give clarity about the alternative factoring arrangements which would be acceptable.
Addition - 'A service must be provided in return for any payment made for that service.'
4. MEDIATION
Paper deferred to next meeting.
5. AWARENESS RAISING
RH reported on discussions with HM&S colleagues to consider the Scottish Government's potential role in developing a public information campaign at national level. It was envisaged that this initiative would extend beyond the campaign to raise awareness about shared responsibilities and the role of property managers as required to support the accreditation scheme. A need has also been identified to increase awareness of the rights and responsibilities associated with home ownership in general (to support local authorities in implementing new powers) and in relation to letting in the private sector. Colleagues will be co-ordinating the proposal for a wider campaign and preparing a business case for further consideration by Ministers.
In view of low levels of awareness and the degree of cultural change required, the working group considered that it would be important to 'kick start' the campaign and build in measures to ensure continual reinforcement. Effective routes for disseminating information would be vital and it was suggested that the Law Society and RICS websites should be included in addition to those already identified. It was also suggested that it could be a requirement of the accreditation scheme that property managers provide their clients with a standard information pack.
6. PROJECT MANAGEMENT
RH tabled a paper summarising progress in developing the various aspects of the scheme (copies will be circulated to members of the working group not present at the meeting).
The following points were raised in discussion:
· Structure: important to clarify the relationship between the host organisation and advisory body.
· Mediation: if mediation is offered on a wider basis than the accreditation scheme it will undermine the incentives for joining.
· Information and advice: another meeting of the information and advice sub-group will be arranged and SB offered to provide copies of CEC's 'Homeworks' series of leaflets to inform discussion at that meeting.
· Standards:
- important that the standards remain aspirational.
- intended that it will be the role of the host to develop guidance to support the core standards and this will be completed after the standards have been tested.
- DW would prefer guidance to be issued with the standards at the time of testing. Standards also need to be refined, particularly with regard to plain English.
- SB offered to seek initial views on the current version of the standards.
- RH to advise on intended process and timescales for testing core standards
7. DATES FOR FUTURE MEETINGS
The working group will be contacted regarding dates for the next meeting, which will be arranged for early November. A further meeting of the information and advice sub-group will also be arranged.
Housing Markets & Supply
October 2009
ANNEX A
PROPOSED ACCREDITATION SCHEME FOR PROPERTY MANAGERS
STAKEHOLDERS' WORKING GROUP
17 SEPTEMBER 2009
LIST OF PARTICIPANTS
· Consumer Focus Scotland: Douglas White (Senior Policy Advocate)
· Convention of Scottish Local Authorities: Douglas Munro (Accounts Manager, Housing Investment, Glasgow City Council)
· Edinburgh Stair Partnership: Sarah Burns (Homeowners & Private Rented Services Manager, City of Edinburgh Council)
· The Law Society of Scotland: Lionel Most (Conveyancing Committee)
· Royal Institution of Chartered Surveyors in Scotland: Sarah Speirs (Head of Communications)
· Scottish Federation of Housing Associations: Sheila Gilmore (Consultant for factoring Good Practice Guidance for SFHA)
· Scottish Government: Lucile Rankin (Property Advice Division); (Roger Harris and Shona Keenan (Housing Markets & Supply)
APOLOGIES
Colin Baxter (Trading Standards)
Kyla Brand (Office of Fair Trading)
Pamela Kellock-Shetty (Scottish Housing Regulator)
Lorraine MacDonald (Property Managers Association Scotland)
Alison McDiarmid (GHA (Management) Ltd)
Natalie Sutherland (Chartered Institute of Housing Scotland)
Jennifer Wallace (Consumer Focus Scotland)