OFT to investigate activities of leasehold property managers

OFT to investigate activities of leasehold property managers

19:04 PM, 5th December 2013, About 10 years ago 53

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The news that firms which manage blocks of flats are to be investigated by the Office of Fair Trading should be welcome to anyone who owns a flat in England or Wales.

Complaints about the management of blocks of flats and the activities of managing agents have been escalating in recent years, as more and more people are now buying flats. But until now it seems that most politicians have not been interested in addressing the concerns of flat-owners. OFT to investigate activities of leasehold property managers

Flats are a popular choice for BTL properties. Virtually all flats in England and Wales are owned on leasehold title. In many cases the freeholder/landlord will be responsible for maintaining and insuring the building, with the flat-owners having to pay a service charge to cover the cost. Freeholders may manage the building themselves or frequently employ a firm of managing agents to do the work for them.

I see that readers of Property118 often raise problems which they have encountered with freeholders or their managing agents – extortionate charges for licences to sub-let, charging penalties for late payment of service charges, massive hikes in insurance premiums, etc., etc.

Now is the chance to make your views known. The OFT wants to hear from interested people and businesses about the priority areas of concern that may be preventing this market from working well for consumers.

A major area of concern has been that some management companies arrange maintenance contracts with companies in which they have a financial interest, rather than with companies that provide good value for money for flat-owners. They are also likely to arrange building insurance with companies that give them the biggest commission rather than the cheapest premiums.

Another frequent source of complaints is the hefty fees some of these companies charge when a property changes hands – first of all the seller will usually have to pay for an information pack that the buyer will need, and then there are fees for registering the new owner as well as any mortgage.

If you own a flat and have had trouble with the managing agents do contact the OFT. They are particularly interested in:

  • Whether leaseholders feel that they have sufficient involvement in decisions taken about appointing managing agents, and if it is difficult to establish whether the property manager is providing value for money or a sufficient standard of service.
  • Whether property managers and freeholders have the same interests as leaseholders in, for example, keeping down costs of maintenance work or buildings insurance.
  • Whether there is effective competition, including evidence about how easy it is to switch between providers.
  • Whether residents receive good value for money and reasonable quality of service.
  • The time, effort and resources required to complain and seek redress.

Full details can be found HERE

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Comments

Annette Stone

20:48 PM, 9th December 2013, About 10 years ago

Lou. If the buildings are in London and you think I can help you are welcome to contact me via Mark.

There are obviously very serious issues concerning some freeholders and what are normally "tied" management companies. I am certain that I know much of what goes on but clearly not all of it.

As far as I can see the best managing agents (not universally popular but generally pretty good) are smaller firms who do not necessarily belong to Trade Associations but who abide by the management provisions of the RICS which are the most stringent.

Some lessees seem to think that there will always be someone else to pay for them and that services will miraculously continue to be provided if they fail to pay on time and in full. They scream and shout when they get reminders or final demands or are taken to Court but it is their co-lessees they are disadvantaging no one else. That is not to say that lessees should be subject to unfair and incorrect charges or to inflated bills but it does cost money to run a building and the lessees are obligated to pay service charges which should also be clearly and properly notified to them via service charges accounts.

When lessees fall on hard times we do our best to assist by taking reasonable stage payments or asking mortgagees to advance additional funds to cover service charges or major works contributions. This is the best we can do as other lessees want services continued and the funds have to come from somewhere

I think this thread needs to hear from some more managing agents who I am sure will also have their own stories but it is a good thread and let's keep it going with calm and reasoned discussion

I am beginning to work on the germ of an idea which may be of benefit to members of Property 118 but it is very early days yet.

Shakeel Ahmad

21:07 PM, 9th December 2013, About 10 years ago

It seems that all lease holders are not paying their service charges & the tenants have become cannabis farmers.

The leaseholders are well aware that they need to pay service charges. What they object to is lack of value for money, admin charges, Insurance commission and the total disdain for leaseholders while holding them in contempt .

The fact that none of the managing Agents & freeholders who normally hide behind P.O.Box numbers have not joined us in the debate speaks volumes.

Chris Amis

22:27 PM, 9th December 2013, About 10 years ago

I can see the outcome of all this being that agents have to join ARMA and abide by RICs.

But has ARMA ever expelled anyone?

And the RICs guidelines don't do anything to stop bad agents quite legally avoiding QLTA consultation legislation.

Shakeel Ahmad

22:42 PM, 9th December 2013, About 10 years ago

Has RICs taken action against anyone ?? These are bodies that create job for the boys & dont kid yourself that they will take any action or have the capacity to even understand the issues,

Above are reasons that that managing Agents/F/H get away with it. I had taken up a case with the property Ombudsman. The Ombudsman came on my side & in addition ordered to pay £50.00 compensation.

The Managing Agents paid me extra £500 as compensation but refuse to resolve the issues for which the matter went to the Ombudsman. When asked why they were not acting on the findings of the Ombudsman. I was told we don't have to.

The Managing Agents took me Court & lost.

Joe Bloggs

10:18 AM, 10th December 2013, About 10 years ago

Reply to the comment left by "Yvette Newbury " at "08/12/2013 - 20:27":

thats what happened to us with our new agents...the md of the new company is a con man and sold us a pack of lies about his company. too good to be true and they are worse than peverel. be very careful with RTM although not sure what we could have done differently as got references and visited developments.

John Daley

10:50 AM, 10th December 2013, About 10 years ago

Reply to the comment left by "shakeel ahmad" at "09/12/2013 - 22:42":

Shakeel,

The RICS has a strong and robust disciplinary panel and they take disciplinary action against RICS members who break the RICS rules all the time. They expell members and hand out stinging fines.

However they only have the power to regulate RICS members and if an organisation uses RICS rules but is not connected to the RICS its a voluntary standard.

Chris Amis

11:48 AM, 10th December 2013, About 10 years ago

Its not just the professional bodies, did a FH/MA ever get prosecuted for not providing accounts in the prescribed time limits, a criminal offence prosecuted by...

Shakeel Ahmad

12:49 PM, 10th December 2013, About 10 years ago

@John Daley. I appreciate that they cannot deal with issues outside their members. I had reported a Managing agents to them. All it did was long drawn ineffective correspondence avoiding the issues.

This was three years ago. I am dealing with the fall out. I felt that taking the matter to them was a waste of time & only digressed my focus.

NewYorkie

13:55 PM, 10th December 2013, About 10 years ago

Reply to the comment left by "John Daley" at "10/12/2013 - 10:50":

@John Daley - "The RICS has a strong and robust disciplinary panel and they take disciplinary action against RICS members who break the RICS rules all the time. They expell members and hand out stinging fines".

John, I assume you are a RICS member, and would like to believe their marketing hype, but I suspect you've never been through the RICS complaints procedure. I'm sorry, but it's total nonsense. It is a comfortable self-help organisation which carries far too much legal weight but no bite.

I employed a RICS surveyor for a simple party wall requirement some years ago, and it turned out he was in cahoots with my neighbour (also a RICS member!), and they contrived to delay my work by 3 months, at a cost of £20,000 ...and no technical issues were actually identified! He wouldn't even provide me with a mobile number or email address, and turned up on site without notice and deliberately when I was not present. I went through the RICS complaints procedure and provided them with a wealth of written evidence. The RICS agreed that the surveyor's 'customer service' should have been better, and fined him £100, deducted from his bill of £4,500!!!

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