Post Covid-19 External Major Works – What options do we have?
At the beginning of the year, all managing agents found themselves in the familiar early year stage of final preparations and planning for major works during the summer months. Section 20’s were in play, contractors lined up, demands were out (or about to go out) and provisional start dates set.
But then March came, the virus spread, and lockdown eventually came and stayed with us for several weeks. Not only has this delayed many projects in the industry but it has made those leaseholder funding projects exceptionally difficult due to the financial implications of Covid-19 on individuals personally across the country.
The main issues which have arisen, that I will touch on in this article are: delays to the planning stages of the Section 20 process due to market uncertainty; staff availability within agents due to furlough, shielding, redundancies or just an inability to work at previous capacities; government advice on essential works and the construction industry as a whole; availability of materials; funding issues and contractor availability. Judging by what I’ve witnessed over the past few months, the latter two have been the most prevalent.
The effect of the lockdown on contractors was exceptionally difficult, pre lockdown they were carrying on as normal, then lockdown came and most either shut down completely or scaled back to just a skeleton team. They all faced their own challenges, for example the availability of materials for works – some worked until the materials ran out and I heard other stories of contractors receiving abuse from the public for working on-site despite being outside. Ultimately it put a halt to many proceedings and to works this springtime, and in turn delayed many major external projects.
When the situation started to change and lockdown started to loosen (all be it slowly), the availability of contractors upon returning for not just major works but also day to day works became exceptionally high. In turn, this has led to a huge demand for contractors and their services this summer, and if there is no second phase, it will prove to still be a very busy end of summer for many.
Ultimately, some larger blocks haven’t suffered the same issues as smaller ones, as predominantly bigger blocks equal bigger reserves, and in turn more money for contractors. One could say that it’s only natural for contractors who themselves will have been stretched financially this year to prioritise larger and more lucrative works.
Therefore, it’s likely to be the smaller properties which suffer and it’s more important now than ever that they have a reputable managing agent to look out for this and create an alternative strategy - which is exactly what we have been doing here at Property Fusion.
So where exactly does this leave the smaller blocks? Firstly, as I have alluded to, it’s important that they have a good agent on board who can also foresee these problems from the Covid-19 fallout.
Secondly, you must be realistic. Consider the options and the facts. If it’s now impossible to carry out works this year, then that’s just the way it is. Under no circumstances should you rush works or carry them out into the winter months – only to then find yourselves with a failed project and having to re-do the works a couple of years down the line.
If it’s a third-party freehold, then first consider whether it’s realistic that the leaseholders will be able to get the money together in what is now an extremely short window. Then assess if a freeholder loan is an option. If neither are a possibility, then it’s time to consider alternative options. If it’s a residential management committee (RMC) then work with the Board of Directors, discuss the options and plan.
Leaseholder communication is key in this phase, so if you take a view that works will wait until 2021 then it’s vital to let them know the plan, and why this is being done. It also provides a great opportunity to ensure that everyone gets ready for an early 2021 demand for their contribution towards the cost of the works and has the chance to plan early on how they will finance this bill.
2021 will still be very busy for contractors, so again, when the decision is made it is important to confirm provisional start dates with contractors and get them booked in for the works at an early stage.
So, you’ve made the decision to defer works until 2021, but the work does not stop there. With external works, it’s usual that they were due this year to resolve some maintenance issues and although Covid-19 has put many things on hold, building deterioration is an obvious exception to the rule.
Look at where the problems are and the options available to the building, it’s never ideal to spend money on an issue which should have been permanently fixed already but it is essential in some cases, so look at what preventive measures can be implemented over the winter period. There’s enough time left this summer to come up with a plan and work with trusted contractors and surveyors where appropriate to execute it. Ultimately, it’s looking at a six-month maintenance prevention plan.
Once complete, again communicate with the leaseholders and let them know what’s being done and in course this will calm any worries or concerns of their own due to delays in works.
I hope this article has proved most helpful and ultimately beneficial to everyone. If there are any questions you may have or you’re looking for a change of agents, then please feel free to contact me.