Management company and redress schemeMake Text Bigger
I wonder if anyone has had a similar issue and can confirm how their local authority has acted (or advised) in relation to whether the redress scheme applies to landlord owned management companies.
We own a company to manages our flats (and only our flats) which are let through the council to people in need (all on housing benefit). We have a good and long term relationship with the council. We (husband and wife) are the only working directors in the company.
Last September, at a forum for local landlords, the council mentioned that they were responsible for enforcing the redress scheme and wanted us to know about it.
The person responsible for the scheme said that it was aimed at people and companies maintaining other people’s properties. He said landlords who maintained and co-ordinated subcontractors themselves were exempt.
I asked whether companies set up by landlords to manage their own portfolios had to be registered for the redress scheme. He thought that the legislation probably (but he was not sure) caught landlord owned companies but that this may not have been intended. In his view (as enforcer of the scheme) registering landlord owned companies seemed a bit unnecessary since the person who would be complaining about the management of the property was the person who was the target of the complaint (i.e. the property owner unhappy with the management of the property complains about the property manager – which happens to be a company owned and managed by the property owner). He said he could not really see the benefit of registering (if the rules caught this situation). He said he would get his legal team to confirm. I also asked whether the council, as the enforcers, would have discretion not to pursue the non-registration of such companies on the basis that registration appeared not to benefit anyone. I explained that if registration is needed I would probably close the company and manage the properties myself (due to increasing regulation and administration costs of maintaining the company).
In December I reminded them that I needed their guidance and pointed out that the Department for Communities and Local Government had produced the official guidance covering a very similar point on page 7. Below is the link to the guidance. The guidance considers where a block of flats is managed by a company owned by the flat owners – in this case the property management company does not need to register with a scheme. the guidance comes to the same conclusion if the property management company is owned by the occupiers of the flats.
In our case we are concerned with a number of flats (not a block) owned by the same person who owns and manages the property management company. So the conclusion, I hope, will be the same.
I am confident that if the Council now decide the company needs to be registered, I shall avoid any fine as I have been waiting (and chasing them) for their confirmation of the position.
How is the scheme being regulated in your area and has anyone any suggestions?
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