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  • Writer's pictureMatthew Payne

Record keeping matters more than ever

In the 15th Century, very detailed records were kept in ink by quill in papyrus ledgers, stacked in rows on heavy wooden shelves containing all the necessary information documenting critical events or parts of their business. Today we have the luxury of the digital world, the cloud, voice recording and other advancements that mean we don’t need paper or physical records anymore, but in a way that can make being compliant even more difficult, to measure the robustness and completeness of something you cannot touch or see. Then go and change the rules and it can make it even harder.

With the passing of the Coronavirus Act 2020, record keeping has become all the more important in these lockdown and post lockdown months, as the Act has made changes to existing pieces of legislation that essentially contradict the conventions that exist in place already. Many lettings and estate agents have still not grasped the nettle of compliance, either from the perspective of stakeholder safety or as a competitive advantage that would allow them to increase their revenues, so the coming weeks and months could prove to become even more expensive if they do not create some processes, and train their staff to use them, or amend ones that exist already that now need to change. The same can be said for Landlords who will need to no doubt rely on evidence of communication over the Spring and Summer when the dust settles. The risk exists in lost rent and denied possession to Landlords, fines and sanctions to Agents who cannot clearly or adequately demonstrate what transpired when seeking to rely on what information they do present. The Autumn and Winter have the potential to become quite litigious.

Both groups are suffering enough with the effects of CV19. Landlords are finding their tenants falling into arrears unable to evict or relet, whilst Agents are losing huge income streams from missing sales, lets and rent collected. To then compound this further later in the year, with further losses simply because they did not take the time to understand the implications of the legislation on their business or to put in place adequate processes and training to protect the business and its customers would be business hara-kiri.

The first job in hand, as I have advised in other commentary would have been to understand the changes and implication of the CV Act for the business and keep the company COVID 19 SWOT up to date, and it is not a one off job. The Act allows the government to change its mind, to amend its advice and instructions at a moments notice, and then there are unforeseen manifestations that will appear along the way that will need providing for; people finding loopholes or doing stuff that no one anticipated. Everyone needs to keep light on their feet, looking for opportunities and threats as they evolve. Part of this exercise is then of course making sure all the facts come from the horse’s mouth, and all the misinformation and fake news is pushed to one side, and Edgar Allan Poe’s advice is followed to the letter. Once clear on what has changed, with or without 3rd party advice, consideration needs to be given to what in the business needs to change in order to protect COST, to avoid unnecessary cost later down the line. Customers, Owners, Suppliers and Teams.

So what has changed that needs to be provided for? Well the lockdown for a start, which we are now well into, but there may be a second or a third. So, what worked, what didn’t work, what changed, what did we learn from? This will cover the practicalities of shutting offices, home working, IT, keys, virtual viewings and valuations, physical inspections and maintenance visits, cleanliness and virus containment, social distancing, and finally business continuity, communication and record keeping.

Business continuity is about making sure in those circumstances your business can operate as efficiently as it possible can and all of COST know who is doing what when, and what practical changes will be taking place to accommodate the lockdown and the continued social distancing thereafter. Changes of service, process and communication should be all well documented and communicated regularly, training provided where required. Losses will be suffered by most people during this pandemic, financially for most, and inevitably the poor health or death of someone close to use all, whether friends, colleagues, or family. There will be few tribes, teams or families that escape CV19 by the time the vaccine is ready. Questions will be asked in the months to come. Having a robust set of processes and communication trails in place demonstrating what happened when is critical in being able to show the business acted appropriately and outcomes were beyond its control to prevent, as many will be. People will die, people will lose money, but any business wants to avoid being responsible for either and being able to prove it.

Communication and record keeping becomes all the more important because of this. Processes need to change, CRM and software defaults changed to reflect what needs recording and communicating at what time. Quite importantly, jargon and language used in these communications to avoid ambiguity is already proving that it is going to cause issue later on. So, lockdown and social distancing implications for employees, what has the Act changed that needs attention?

It mostly concerns lettings and property management. Firstly, clear processes and communication on gaining access to properties for essential maintenance and inspections, client consent and contamination risk assessments. No one wants to be responsible for spreading the virus, and health should become before wealth.

Secondly, Courts have been closed, eviction proceedings suspended until June for now, after which there will be a backlog. Grounds for applying for a Court Order under Section 8 of the Housing Act will start to increase significantly, but because of delays, memories will fade and accurate record keeping of every email, every conversation minuted will be critical. These proceedings take 6 months at the best of times, they cloud stretch to 9 or even 12 months by the time this is all over. I cant remember the detail of many innocuous telephone calls from a year ago.

Thirdly, the notice served under Section 21 of the Housing Act has increased from 2 months to 3, but at the same time properties cannot be remarketed, so void periods will increase, and have done so already. Likewise, section 21 notices cannot usually be served if maintenance is outstanding for example, but the CV Act allows for landlords and Agents to forgo non-essential maintenance until further notice, or even essential contractor visits for Gas Safety certificates for example, if the Agent or landlord can prove the tenant refused access or the contractor refused to attend.

Fouthly, fake news and misinformation has meant that many urban myths about rent and mortgage holidays being standard has led to an increase in tenant rent arrears, in some tenants using it as an opportunity when they have suffered no loss, and in many cases new payment arrangements being agreed. Making sure that all new arrangements are correctly administrated using the correct language and terminology is key. All underpaid rents should be regarded and described as arrears from the outset, not holidays, or deferred payments, or rent reductions. The only way to retain a tenant’s contractual obligation to pay any outstanding balance is to call it arrears; it is still owing. A reduction or holiday could imply it is no longer due, and certainly won’t count towards the 2 months required to file under Section 8. Agents and landlords will get this wrong will and inevitably there will be a lot of finger pointing further down the line. The complete current government guidance can be found here. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf

As per my blog on the opportunities afforded by the lockdown with Willy Wonka’s golden ticket, those Agents and landlords that embrace this as an opportunity to better refine and improve their compliance communication and record keeping, will see the advantages to getting the whole compliance piece sorted as a whole. For those that think they have got it cracked, remember there is no such thing as perfection, so look for weaknesses and omissions, try and break processes and find improvements. Either way whatever the starting point, getting the infrastructure and culture right is the most important thing. Everyone and every business make mistakes, and the Courts, the Ombudsman, ARLA know that, which is why if you make a mistake but can demonstrate you have taken the legislation seriously and have well documented systems, processes and training in place will find that they take a much more lenient approach when handing out fines. If they find Agents have done little or it has been half baked, expect the opposite.

Time to sharpen those quills.


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