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Landlords need to be risk averse16th July 2014

Not all risks are obvious or visible, but they can put the landlord in jeopardyWhen it comes to risk associated with property, the buck will always stop with the landlord. An insurance or claims management company will come knocking on the landlord's door as the first port of call when an incident occurs.

At the end of the day, the sites they manage - and the people who work or visit them - need to be protected. Whether the landlord delivers property management services in-house or outsources to an agent, the risks remain the same. Not all risks are obvious or visible, but they can put the landlord in jeopardy.

Here are some of the key risks and how they can be managed.

Health and safety
The provisional figure for the number of workers fatally injured in 2013/14 is 133, and corresponds to a rate of fatal injury of 0.44 deaths per 100,000 workers(1).

Landlords need to ensure that there is a comprehensive review of their health and safety procedures and gauge how they are being managed.

If they outsource this work, then the provider should be able to evidence their best practices and give documentation detailing the measures that have been taken to reduce the risk to the landlord. The worst-case scenario is a fatality on site, this becomes the landlord's responsibility - they will need to prove that systems and procedures were put in place to manage the risk of this occurring. Were the appointed sub-contractors verified? If the work is deemed as being hazardous, were the relevant permits and RAMS in place? They need to know that the appointed engineer had adequate training to deal with the task in hand?

Risk assessments and method statements should be completed to protect the contractor, the property and anyone working in it. Winter gritting is a good example of this, when working with a provider, landlords need to check that a robust claims procedure is in place - they need to rely on the fact that there will be a clear audit trail in the event of a potential accident caused as a result of bad weather. If held responsible under the Corporate Manslaughter Act, a landlord could face a prison term.

The property management team also needs to ensure that fire, Mechanical & Electrical (M&E) and lift log books are being updated and all documentation is in place to show that due care and attention has been paid to both the plant and safety of tenants and engineers.

The Construction Industry Scheme (CIS)
Another invisible area is the Construction Industry Scheme (CIS), which is administered by Her Majesty's Revenue and Customs (HMRC) and regulates payments from contractors to subcontractors in the building industry.

It can prove problematic for organisations that don't specialise in allocating small works. Contractors can carry out some works that fall under the scheme as well as works that don’t. Deciding what does and doesn’t fall under the scheme can be confusing, even for those that think they have got to grips with the ever moving guidelines. And, they need to have the facility in place to manage CIS deductions and payments.

At Propertyserve, we help to remove this risk for landlords by handling all verification and monthly filing processes to ensure the scheme is administered correctly, this removes the risk from the landlord and or agent simply by only having a single supplier to pay.

Managing suppliers
Landlords need to ensure they are working with suppliers that care - they need to know that when things go wrong, they are covered.

When procuring, it's about having access to the best contractors, and controlling the work that they do. We always put water-tight Service Level Agreements in place, and manage elements such as rates and transparency of cost. Other Key Performance Indicators need to illustrate a contractor's overall performance. At the same time you have to select suppliers that you can work with, suppliers who will communicate, who will ask questions, who will add value - we know that our job is to protect the landlord and or their managing agent. It is about being as risk averse as possible.

Cost vs value
The underlying theme is around working with the best value suppliers. But, my advice would always remain - low cost won't necessarily mean the best value, and in fact it rarely does.

It's about partnering with suppliers who see their role as protecting the landlord. The way in which they set about doing their job and the way in which it is managed is crucial to ensuring everyone involved is protected. Almost by default a contractor will protect the landlord, simply by protecting themselves, working safely and adhering to procedures and policies. And, in today's claim culture society, surely that will always be the best route to take?

About the author 

Chris MacDonald, PropertyserveChris MacDonald is Managing Director of Propertyserve UK.

1 - the information relates to the latest 'full-year' statistics on fatal injuries in the workplace, for 2013/14.

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