Do members consider that where a trust owns a property, and it is lived in rent free by a beneficiary, the trustees are bound by the gas safety regulations, and should obtain an annual certificate, as they would with a rental property?
Simon Northcott
The statutory requirement for a gas safety certificate applies only where residential property is occupied by a rent paying tenant.
Whilst beneficiaries in occupation might have an annual servicing arrangement for their gas boiler, this falls short of the tests required for the gas safety certificate (which covers all gas appliances and the supply pipework).
I have felt it to be perverse that a trustee should owe a stranger in occupation of trust property a far greater duty of care than to their own beneficiaries, and have advocated the voluntary application of the statutory standards for tenanted property (not just the gas safety requirements) to beneficiary occupied property. This can produce conflict with beneficiaries in occupation, though, as they see it as “unnecessary interference” by the trustee in the management of their own home, rather than a concern to ensure their continued safety. Often the situation is compounded by the fact the only asset held in trust is the property in question, so that there is no ready source of payment for the additional requirements.
The STEP UK Practice Committee is drafting a series of notes on a trustee’s responsibilities in relation to occupied residential property, which should be issued later this year.
Paul Saunders
I guess this is an example of exactly what it means to be a trustee / having a fiduciary duty; namely an extra duty of care, more than is ordinarily required. I would guess from all the home owners reading this thread less than 5% (if that) would have an annual gas safety inspection for their own residence, (occupied by their nearest and dearest spouse and children). So whereas it seems perverse that a trustee owes a stranger a greater duty of care than their own beneficiaries, it is perhaps more perverse that that duty is even less to what they may be affording their own family!
Are the days of adopting a ‘practical approach’ assigned to the dustbin. If a beneficiary, say a surviving spouse, occupies a home by virtue of having a life interest could the benefiary simply not ‘opt out’ of requiring an annual gas safety inspection, purely to save costs and administration. Alternatively, why stop at gas certificates, what about the electrics? If the comparison is to be made to tenanted accommodation, smoke detectors, fire safety doors… Often ‘the safe option’ becomes the norm, which leads to greater costs and administration expenses. It is for this reason that guidance from the likes of STEP becomes invaluable as their is a benchmark to adhere to.
Haroon Rashid
I Will Solicitors Ltd
When handling their own affairs, private individuals don’t necessarily worry about diversification; nor do they necessarily seek a balance between capital appreciation and income growth; nor do they invest in medium-risk securities.
A trust is different, because the trustees have a duty to a third party and ought not to run risks that the reasonable man would not. The gas safety certificates are a natural follow-through.
Some family trustees might well say that “a practical approach” means you don’t necessarily absolutely have to take out buildings insurance. Why not take a risk?
Julian Cohen
In response to comments made by Julian Cohen, just to clarify, I was not suggesting that trustees should ‘take a risk’, but rather that guidance from STEP would be welcome as otherwise, where does one draw the line? In particular, if a life tenant beneficiary (and perhaps including the remainder beneficiaries) do not wish to incur the cost, should they not be given the opportunity to ‘opt out’? And where do you draw the line, gas certificates, electrics, smoke alarms etc…
Haroon Rashid
I Will Solicitors Ltd