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Howoften should our block be valued?

Our PropertyManager decidesthe suminsured forour buildings insurancepolicyeachyear howeverwehavenot had thepropertyvaluedfor morethan10years.Can anyone advise us on how oftenour blockshouldbe

valued? Nameandaddresswitheld

Roger Corp, Director of BarrettCorp &Harrington Ltd responds

The RICS Guidance Note (2nd Edition, 2011) relating to reinstatementcost assessmentsfor buildings is clear on this particular subject. It draws attention to the need to reassess the base suminsured on a regular basis. Its good practice advice is that this is dealt with by way of a desktop update on an annualbasis, with a full reassessment undertaken in everythird year.The RICS says afull reassessment also needs to be prepared in the event of substantialbuilding alterationsbeing undertaken to the property. Whenthe property

manager initially decides thesumto insure,this should be on thebasis of afullreinstatement cost assessment,whichclosely followsthe RICS Guidance Note. The assessment should only be carried outbythe propertymanager where he hassufficientexpertise in this area. Otherwise aspecialistfirm should be appointed. Thereafter, the assessment should be reviewed annually and we would suggest a formal desktopreview by the original surveyor in at least thethird year. As specialistsin reinstatementcost assessmentsfor insurance purposes,wherewehave carried out the original

Flat Living Spring2012 Whilethe ‘good

guys’ follow the code, the bad guys’ don’t...

A qUeStIonof ReGULAtIon

You will no doubt have seenBaroness Gardner ofParkes raise the question of regulation formanaging agents, in the House of Lords on 17 January. It is good that the subject is being debated and hopefully the government will listen and take action. Unfortunately I suspect theywon’t,asthe ‘official line’seemsto be ... theRoyal Institution of Chartered Surveyors (RICS) Code of Practice providesanadequate frameworkfor the propertymanagementindustry.

Whilethe ‘good guys’followthe code, the‘badguys’ don’t... even industry bodies such as the Association of ResidentialManagingAgents(ARMA) arenot as effective as they mightbein policing theirownmembers. Isuspect that sometimeslarge companies paying largemembership fees have an

assessment andasbuilding inflation is currently relatively low, in most cases (and wheretherehavebeen no significant building alterationssince thedate of the original assessment) we arecomfortablewith providingadesktop review up to five years. After that a full reassessment,including asitevisit, is recommended to reflect currentcosts specifictothe building being considered,market

influence on disciplinary procedures – but that’s justmypersonal opinion. Theonlyway to getthe roguesout

of thesectoriscompulsoryregulation. Minimumstandards need to be set and severe penaltiesimposed forbreaches of thoserequiredstandards.Managing agents extractlargeamountsofmoney fromleaseholders across thecountry – andthose leaseholders need protection fromthe loopholes in the present arrangements.While themajority of agents do a good job, often coping admirablywithdifficult leaseholders andunhelpful bits of leaseholdlaw (such as the £250 Section 20 expenditure limit), it is all too easy for the rogues to stay in business. It is timefor change!

BernieWales, FIoD, FIRPM,AssocRICS

conditionsand to pick up on any building alterations whichmight have been overlooked. In summary, 10 years

betweenvaluationsisfar toolongand significantly increases the risk of underinsurance leadingto potentially insufficient funds to reinstatethe building if theworst were to happen. In addition, theproperty managermayleave himself opentobeing sued forany

financial shortfallresulting from underassessment andfailing to follow good practice.

Redtape challenge

ARMArecently responded to theGovernment’sRed Tape Challenge.Thisis agovernmentinitiative to ask the public to suggest ways to reduce unnecessary regulations

Flat Living

Ifyouhaveaquestionorwouldliketosharewithotherreadersyourideasorexperiencesof livinginaleaseholdblock,wewant tohearfromyou.

Addressyourcommentsorqueriesto theFlat Living teamat

andbureaucracy (for more on this, seemycolumn on page29ofthisissue). As ARMAmembers,my firmcontributed to the response. The key points

ARMAmakes are: nS20shouldbeamended so that thequalifyingamount isanamountwhichresults in therelevantcontribution ofanyflat beingnomore than£250or aminimum totalcost of thequalifying works of £2500whichever is thegreater.Bysettinga minimumof £2500 forany one schemethis change wouldreducethecostsof consultationformanysmall

schemes. nWithdrawthe requirementtoissuea summaryofrightswith everydemandforavariable servicecharge. In its place-toofferprotection to lessees-there should be arequirement that every landlordwouldserve the sameprescribed summary of rights once peryear; or alternativelythatthe landlordwouldadviseall lesseesreceiving demands once peryearthatthe summarywas available on itswebsite andcould be downloadedfreeofcharge. It is estimatedbyARMA that theequivalentofone thousand 40-yearold trees areneeded to comply with this pieceoflegislation aboutsummariesofrights

each year. nLandlord and tenant lawfor long leasehold needsconsolidation and simplificationtocater for thefactthatthemajority of blocks in the private sector are either self- managed by the lessees or controlled byRMC and RTMcompanieswhich appointmanaging agents. Letushopethat

thesepointswillbeduly considered and that we seesomereduction in the burden of redtapethat both lessees and those thatmanage property are expected to take on board –

and pay for. JohnWilliams,AstonRose


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