Why Are Landlord’s Managing Agents Failing to Perform?

With the growth in the number of new build properties and large dwellings being converted into blocks of flats, the need for associated professional lease management advice and services has increased. The demand for property consultants in the specialist field of residential freehold management has seen a dramatic surge however, if leaseholder reports and feedback are to be believed, the performance of the typical property management agents and their staff leaves a lot to be desired.

As director of a leading RICS (The Royal Institution of Chartered Surveyors) block management surveying practice, I am acutely aware of the need to improve the image of the property management profession.

Many management agent companies have been severely criticised in recent years for poor practice standards. It is unfortunate that some of the mud being thrown is justified.

The residential service charges sector is littered with disgruntled leaseholders, freeholders and property management companies seeking improvement and a better deal. With so many leaseholders out there looking to change their sub-standard managing agent there can be little doubt that a large number of agencies and providers in the residential management sector are failing. So what has gone wrong? And why do the freehold block management companies and leaseholders affected not simply take action to change their agent to a professionally run outfit?

here is after all legislation in place for qualifying properties which gives leaseholders a Right to Manage ((RTM)or to purchase their freehold through Enfranchisement. I intend elaborating on the above and the Commonhold and Leasehold Reform Act 2002 in future articles as I wish to concentrate here on discussing the source of the lease management problems and why there is not always a ready made, easy quick fix solution.

Possible reasons for the decline in property services standards may be down to the larger block management firms growing in size through acquisition of local smaller practices. Following such a takeover the previous owners of these smaller organizations often retire or move on, the result being that their expertise and knowledge is lost. Clearly this loss will tend to dilute the quality of service provided to those properties transferred.

The service is also affected where the new block manager’s offices are situated some distance away from the properties themselves. The result being that visits become less frequent and potential problems and essential building maintenance and repairs are not identified quickly. Difficulties inevitably result and again the poor leaseholder loses out. Other leasehold and freehold block management agents have suffered in recent years where some of the larger firms reorganizing internally, cost cutting and seeking extra margin.

By implementing cost reduction measures and restructuring within their businesses this can adversely affect customer service and perceptions. The result of such change often leads to fragmentation of lease management services with communications flow being impeded. One department will not always be aware of the others actions which becomes apparent when leaseholders phone up and receive conflicting and inaccurate reporting. Estate agents are also getting in on the act offering service charge managing agent services in addition to their core business. Whilst some will no doubt be competent, others may find themselves out of their depth. Prospective clients should always check out the credentials and qualifications of those who will be providing the service.

An experienced sales or lettings manager is not necessarily the best person to protect the value of your freehold property and the interests of your property management company. It is possible that there may be a suitably qualified person somewhere else in the organization but this will do little to influence the management of your freehold. It is the competence of those carrying out the work that really matters. You should establish if there is a risk of your property being run by others less well suited and unqualified.

Seek out a Chartered Surveying practice or the phrase Regulated by RICS (The Royal Institution of Chartered Surveyors) or alternatively an agent who is a member of ARMA (Association of Residential Management Agents). 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.

The services of any practicing managing agents should therefore meet the standards set out in this code. If not, questions should be raised.

There are of course those firms which simply refuse to take effective responsibility for quality standards and are happy to muddle through. Staff are often poorly trained, not fully aware of codes of practice and standards, and are not always sufficiently qualified or experienced to meet clients’ needs. So when leaseholders face ongoing problems with their landlord or block managing agent not performing, what can be done?

If repeatedly challenging them has proved ineffective there are a number of options open to leaseholders under current legislation..These are set out and further clarified under the more recent Commonhold and Leasehold Reform Act 2002 which also covers service charge and other landlord related matters including giving tenants a right to consultation concerning proposed works or services which meet or exceed specific criteria and cost limits.

Leaseholders now have a Right to Manage their property and can takeover the management function from the landlord by setting up their own company to do so. The landlord retains their interest in the property and ground rent is still payable under the lease as before. This is a relatively inexpensive arrangement and can be achieved more simply than Enfranchisement discussed below. It is likely that the Residents Management Company, or RTM, will have a duty to the landlord to manage the property to a reasonable standard to allow this arrangement to continue.

As an alternative to the above, lessees may prefer to collectively buy the freehold from the landlord using their statutory right to Enfranchisement. This process can be more expensive and in practice more difficult to achieve. However it provides leaseholders with outright control and the freedom brought about by ownership. By outright purchase of the freehold, the leaseholders completely remove any interest the previous landlord may have had in the property. Ground rent is no longer payable after the sale, however this element will be reflected in the overall purchase price paid. In all cases, the terms of the property lease still apply, subject to any amendments which may be introduced or lease extensions agreed.

Current legislation requires that lessees need to obtain a majority agreement amongst the other leaseholders or freeholders. But in practice there are barriers to achieving the consensus required amongst the parties involved. In some cases, with so many flats being rented out to tenants, the initial task of finding and contacting the lessees can prove extremely difficult. But for all of those of you who may be implementing measures to try and change their management agents I would like to impart some words of encouragement.

It is essential that leaseholders are committed to the proposed action and that the necessary funds are collected in good time. With the benefit of professional advice and help, your goals can be achieved. Providing that your property meets the qualifying criteria, please be assured that your efforts will eventually be rewarded.

Overall, the residential sector is undergoing change. The new legislation recently introduced appears to be gradually improving standards and accountability. Revised health and safety regulations and the introduction of risk assessments have also undoubtedly made a difference, helping to protect people in their homes.

It is hoped that the combined effect of these changes will weed out the substandard practices which have been all too commonplace in recent times; helping restore professional standards throughout residential property management practice.

Above all we need to strive to provide a block management service which protects clients interests and adds value to properties, achieved through effective maintenance and sound management practice. With the RICS Service Charge Residential Management Code being approved by the Secretary of Sate in 2009 best practice for management is surely set for improvement.

Residential Freehold Management and Maintenance Services for Blocks of Flats in London and the South East.

VFM’s property management agents services are benchmarked to the quality standards set out by The Royal Institution of Chartered Surveyors (RICS) and typically include:-

– Property Maintenance and Repairs
– Leaseholder Enquiries
– Financial Control
– Expenditure
– Budgeting
– Service Charge & Ground Rent Collection
– Accounts
– Client Reporting
– Lease Management
– Co. Secretary

Contact VFM Property Management Chartered Surveyors, Property and Development Consultants Tel 020 8658 6824 Fax 0871 990 2366.
Residential Freehold Property Services for Blocks of Flats throughout London and the South East

For further information and advice regarding the management of residential freeholds or other property matters contact us or visit our website by clicking VFM Block Management. VFM provides block managing agent residential property services for freeholds, landlords, leaseholders and residential management companies including service charges, building maintenance and lease management

When it comes to maintaining and ensuring the smooth running of freeholds for blocks of flats, few things are more ess

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