Dealing with Managing Agents
Today we will be covering how to get the best out of managing agents. In the UK, there are approximately 9 million properties that use managing agents, so there is a good chance many of you will be paying for these services. However, recent reports suggest that many of them are not value for money and many people are calling for them to be regulated more strictly. There is currently no requirements or qualifications needed to become a managing agent. This can be dangerous as there is leeway for people to take advantage. So, lets cover the problem, how to avoid it and what the solution is.
Managing agents are employed by freeholders or leaseholders to look after communal features of a group of properties. For this work managing agents charge service fees. These fees are often paid into a communal bank account by the owners. A big problem with this structure is that many agents have free reign to withdraw from these accounts. The agents will then pass these withdrawals off as payment for repairs or maintenance, when in reality the cost to them was significantly lower or nothing at all. One recent example stated that a group of leaseholders were charged ten times the market rate to fit a building with a fire escape. In another high-profile case, a managing agent was given a 30-month prison sentence after stealing £122,000 for alleged repairs that were never actually carried out.
So, what can we do?
Currently there still isn’t any regulation so we have to do the due diligence ourselves when selecting agents. First things first speak to other leaseholders or freeholders that use management agents and ask them what services they require and how much they pay for them. Using this information, we can prepare a list of required services, as well as a schedule and budget for these services. We then organise an account for fees and a way of billing and collecting charges. Next we need help picking the best agents. There is actually some accreditation for managing, provided by ‘The Association of Residential Managing Agents’ (A.R.M.A.) at arma.org.uk. So, checking that they are accredited could sort out the higher standard agents. Then we can check on the First-Tier Tribunal website to make sure the agents haven’t been involved in any previous disputes. Once we have picked one, we have to make sure the contract clearly outlines the agent’s responsibilities, which we determined in our earlier plans. The A.R.M.A. website and ‘The Royal Institute of Chartered Surveyors’ both provide a template for this.
Now, onto the solutions, in April 2018 (more than a year ago!), the housing ministry published plans for a code of practice for managing agents as well as an independent regulator to enforce this code. These would make it easier for us to contend unfair charges and require agents to get qualifications however these still haven’t been introduced. The housing ministry still claim to be committed to adding this regulation, with a report on how this would work expected to be released in July. So, currently not much is happening, we have to continue to do the research to avoid being ripped off.