The recent article in the Mail On Line - 'Homeowners ripped off by managing agents charging sky-high fees' By Lauren Thompson reports on property manager, Peverel's performance in the view of disgruntled leaseholders.
More specifically complaints made against the company include:-
Overcharging.
Fees that rise inexplicably every year.
No explanation of what charges are for. Freehold Landlords London agents using their own companies to provide hugely expensive insurance and maintenance services.
No regulation to protect people from shoddy practices.
Whilst this report highlights many of the problems with some of the current day managing agents' service standards it demonstrates the importance of proper regulation in this sector.
As director of a specialist, London based property and block management firm, I fully recognise that there is much need to improve both the image of the profession and the quality of the services provided. Landlord customers, who may exist in many different forms, include leaseholders, and freehold or resident management companies should be better informed as regards current regulation.
Contrary to the problems identified in the article in the Mail, clients should be advised that appropriate regulation most certainly does exist. The main problem appears to be that many flat owners are simply unaware of their rights and the solutions available to them. Perhaps unsurprising in a somewhat complex arena which requires that clients are able to deal with teams of professional managers covering many different fields of expertise. In the execution of its professional services, the appointed managing agent, acting on behalf of the freeholder, must never forget that there is a duty of care owed to leaseholders and residents. The block manager.requires to strike a balance and must behave impartially.
This responsibility is a key point which agents should concentrate on when considering the provisions of the lease and the control and expenditure of the service charge monies which may be entrusted to them.. From building maintenance to legislation, health and safety, lease compliance and of course accounting standards, the range of activities is vast. But is this not precisely the reason why landlords and freehold management companies require these professional property management services in the first place?
So having established the need for a qualified, impartial, high standard of service, what regulation exists? And what professional organisations provide codes of practice and procedures in support of good practice?
To be credible, any professional standards must be effectively monitored and enforced. Failure to do so would dilute any assurance to the customer regarding compliance. An effective system of regulation and control will therefore serve.to ensure that the building freehold owner can make an informed choice when selecting their management agent. A choice on the basis of a known professional performance criteria.
There are various codes of practice which might be considered appropriate however the RICS, (The Royal Institution of Chartered Surveyors), has arguably led the way forward. The RICS Service Charge Residential Management Code' sets out what is regarded as best practice for management in the private residential leasehold sector as well as highlighting any legislative requirements that managers need to comply with. A Chartered Surveying practice or firm which operates under the terms 'Regulated by RICS' must meet these rigorous standards. Additionally under the stringent RICS Regulations, service charge leasehold funds are protected in a secure client account again being subject to careful, regular checking and auditing by the RICS.
Alternatively an agent who is a member of ARMA (Association of Residential Management Agents) should also aim to meet the RICS Residential Code. However these firms are not always subject to the same process of scrutiny as RICS members and are not 'Regulated by RICS'. Whilst the services of any practising management agents should meet the standards set out in the RICS code, it is clear from the report from the 'Mail On Line' that many firms fall far short.
The latest RICS 'Service Charge Residential Management Code' was approved by the Secretary of State in 2009 with the aim of setting out the standards for the profession taking account of new legislation. If a block managing agent's services fails to meet this code, questions should be raised, firms challenged, and any concerns clarified. New regulation has been recently and progressively introduced under the Commonhold and Leasehold Reform Act 2002. Revised, improved health and safety regulations have also taken effect, largely in the same period.
By making agents more responsible for their actions, the effect of these changes should be helping to improve service quality and it is heartening to see that leaseholders are standing up for their rights. As the new legislation takes effect, the better qualified and experienced professionals should be well positioned to advise and guide clients through the new requirements.
The latest RICS Service Charges Code should also assist in weeding out those who are unable or simply unwilling to comply. As a result of some of the changes being implemented across the sector, building owners and freeholders should increasingly be able to add value to their property assets through effective and efficient lease management. But this will only be achieved if landlord clients lead the way forward by insisting on employing suitably qualified and regulated property management professionals.
Russell Dyer is Director of London based VFM Property Management Chartered Surveyors, Property and Development Consultants
VFM look after all aspects of service charges management for time pressed landlords, freehold owners and leaseholders in residential blocks of flats and apartments. As a result of quality problems in the sector generally, the benefits of VFM's specialist residential block management services are currently much sought after. Unlike many of its competitiors, VFM is a chartered surveying practice, regulated by RICS, giving its clients many advantages. Its quality assured, professional services are benchmarked and tested to the stringent standards set out by The Royal Institution of Chartered Surveyors (RICS). Leaseholders and freeholders alike can benefit from this no risk guarantee with VFM being fully compliant with the RICS Service Charge Residential Management Code.
VFM's block management service standards are unique in their application with typical duties including:
Property Maintenance and Repairs - Leaseholder Enquiries - Service Charges Financial Control - Expenditure - Budgeting -Service Charge & Ground Rent Collection - Accounts - Client Reporting - Lease Management and Compliance - Company Secretary Service - Major Works Consultancy