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Appointing a Managing Agent
Appointing a Managing Agent for a residential block of flats, is something you’ll only consider if your existing managing agent is under-performing … or the relationship between you is tense and unhappy … or your needs as a block have changed beyond what the managing agent can provide. Whatever the reason, there’s a few things to consider, check and think about before you embark on the firing and hiring. This guide is designed to help you through that process as smoothly and painlessly as possible and we'll be covering the following topics;.
How Have You Been Set-Up?
The world of leasehold is a complicated place - so you want to ensure you understand the territory, know your planned route, and your intended destination. The starting point for all things leasehold is therefore “Read The Lease”.
The lease wording’s unique for every block of flats and, consequently, there’s no ‘standard set-up’. Reading your lease will enable you to ascertain, amongst many other things, “Is the day-to-day management of the building controlled by the freeholder or a Residential Management Company?” If you don’t understand what your lease says about that question – ask the current managing agent who they work for … who is their client?
If the managing agent works for the freeholder – then it’s that freeholder who has the power to ‘hire and fire’. That means you and your fellow leaseholders will have to persuade the freeholder to change managing agent – or you’ll have to choose another route to change … such as Right to Enfranchise or Right to Manage.
On the other hand, if the managing agent works for a residential management company, the power to hire and fire lies with the shareholders, or members, of that residents’ company – which is usually the leaseholders at the property. If your block of flats has this type of legal set-up, read on.
What Type of Managing Agent Do You Need?
Having read the lease and established who controls the property management, the next steps involve analysing exactly what’s ‘wrong’ and what exactly you and your neighbours need when change happens. Clarifying your present problems enables you to create a ‘wish list’, so you can ensure you appoint the right managing agent ….. and that managing agent will understand what your wishes are. After all, there’s no point “jumping out of the frying pan into the fire”, as the saying goes. You want this change to be positive, not a waste of time.
One of the causes of poor management is having the wrong type of managing agent appointed. And there are two main considerations here – the company and the property manager.
Managing agent companies come in all shapes and sizes. There are the small, boutique companies which tend to provide a bespoke and personal service … a small number of staff, who provide a very hands-on service … within a small geographic area (much like Casserly Property Management). At the other end of the spectrum, there are the large national companies, who manage tens of thousands of properties across the country.
The larger companies generally have considerable resources and particular specialists working within the firm, who can be deployed wherever and whenever needed ….. alongside the property managers and administrators who carry out the bulk of the day-to-day work. That can be really useful if you live in a larger building, or estate, where there may be ‘mixed use’ ..… with shops, offices, and/or retail units alongside the residential flats.
The smaller companies generally don’t have the resources to employ specialists on a full-time basis and, therefore, will appoint specialists on a case-by-case basis, as and when needed. That’s not a bad thing – and usually means the specialists appointed are local to the property and don’t have to travel from a national head office, with all the costs that entails.
Related to the size of the company, is the type of service provided. Larger tends to mean impersonal, standardised, systemised ….. where you’re often treated as a number, rather than a person. Whereas a smaller company tends to mean personal, bespoke, ..… yes systemised ..… but you’re treated as an individual, not a number. That tends to feel far more caring.
Which leads us onto the individual people who you see managing your building – the property managers.
Just like managing agent companies, property managers come in all shapes and sizes. There are the older, more experienced, more qualified managers ..… who have been there, done that, got the tee-shirt. And there are the younger, less experienced, less qualified managers ..… who are keen, enthusiastic ….. but don’t necessarily know all they should know. And there’s every variation in between.
It’s also important to remember, your property manager is not Harry Potter. He or she doesn’t have a magic wand to wave – and they can’t solve all your problems. In fact, whoever they are, they’re not there to solve all your problems. They’re there to administer the terms of the lease … within the laws of the land. So, if your problems involve the local authority not collecting rubbish ….. or noise from an adjacent block of flats ..… or some other external annoyance – your property manager isn’t the cause nor the person responsible for removing that annoyance. In those circumstances, complain to the correct responsible person/body.
But getting back to your property manager, to your lease and to your block of flats …..
The important question when it comes to property managers is ..… “Do you get on?” At the end of the day, property management is a people business – and if you don’t get on with the people you’re dealing with – experience and/or enthusiasm doesn’t matter ….. you’re going to be unhappy.
So, think about the poor situation you’ve got at the moment. Discuss with your fellow leaseholders whether the problems might stem from the size of the managing agent company ….. and/or ..… the individual property manager and administrators you’re dealing with. Once you’ve decided the answer to that question – think about what sort of managing agent and property manager would be better for you in the future. You’ll then have a much clearer idea of what you’re looking for when you bring about change. Getting this clear will save you a lot of time and grief in the future.
Property Management Professional Bodies
The residential leasehold property management world has two main professional bodies. It’s important to research which body governs your present situation – and what’s important for you for the future, when you bring about change.
The most prominent professional body in residential leasehold management currently is TPI: the Property Institute. This is a ‘trade body’ for managing agent companies and its members are corporate. It’s the company that’s governed, not the individuals within the company.
TPI provides training and resources for its member companies. It also monitors the systems and activities of its members by auditing their records and processes (including client banking activities) every three or four years. This is because TPI Accredited managing agents must meet the TPI Consumer Charter & Standards, a bespoke set of professional standards aimed at consumer protection and best practice in all areas of residential long leasehold management.
Individuals (such as Property Managers) working in the residential leasehold world, generally become members of TPI: The Property Institute. The TPI provide training, resources and qualifications for individuals. There are a series of examinations, alongside experience in the field, which lead to,
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ATPI: Associate of The Property Institute
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MTPI: Member of The Property Institute
The third professional body which is prominent of the leasehold world is RICS; the Royal Institution of Chartered Surveyors. By far the oldest property organisation, the RICS covers a whole range of property disciplines ….. not just property management ….. and it has individual and corporate members. It is, therefore, important to clarify the precise nature of RICS membership in place – as employing a Chartered Auctioneer or Chartered Valuer won’t necessarily be what’s needed for successful residential leasehold property management.
Having said that, RICS is very active in ensuring its members are professional, abide by the Code of Practice, maintain high financial standards and that all appropriate safeguards are followed.
Who’s In Charge?
You’ll recall from above that the very first thing to be checked when thinking about changing the managing agent was … Who’s in charge – the freeholder or a residents’ company? And if you’ve got this far, you’re in the latter category; residents’ company.
There are various types of residents’ company in the property management world, including;
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Residents’ Freehold Company (RFC)
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Residents’ Management Company (RMC)
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Right to Manage Company (RTM)
Within those, there are companies limited by shares (with shareholders) or companies limited by guarantee (with members). For the purposes of this guide, it doesn’t matter which type is in place at your property. The important thing is … the managing agent works for the company.
The company is a legal entity in its own right. It’s physically represented by its shareholders/members and its day-to-day actions are controlled by its directors. It is, therefore, the company directors who control what happens and when:
It should always be remembered that the responsibility for what happens, or what doesn’t happen, lies with the company directors. Consequently, if there is ‘poor management’ it is the responsibility of the directors to remedy the situation. First by providing suitable instructions … and if that fails to resolve the problems, then by firing the poor managing agent and appointing a new one.
The Management Agreement
The next thing to look at, before taking action, is the current management agreement. This will be a document signed by both parties – a contract between the residents’ company and the managing agent company … signed by the directors on both sides.
Management agreements come in all shapes and sizes, too – but the majority will probably follow the wording provided in the ARMA Management Agreement template. Generally, the agreement will be for a fixed period … not for longer than one year … and quite often ending on the same day as the service charge year end.
The important thing for our purposes here, is that the agreement will provide details for ‘termination’ of the agreement. If the agreement is to be ended before the end of the fixed period; e.g. before the financial year end … then there will be a process to go through … with a timescale attached. It is important to clarify the termination clauses, so that the appropriate notice can be given by the required date.
And looking to the future, with the appointment of a new managing agent, the resident directors should carefully consider the terms of the new agreement before they sign it. (But that’s a whole separate set of considerations involving fees, etc.)
Problems and Remedies
At the start of this guide, we said it’s important to reflect upon your present situation in order to understand what has gone wrong ….. why it has gone wrong … and what needs to change in order to ensure a happier future. The resident directors – and the leaseholders, generally, may have an input here – need to document exactly what ‘problems’ there are. This might include:
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Photos of disrepair to the building and/or grounds.
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Photos of poor workmanship or poor services.
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Diary records of complaints, notifications, emails, correspondence and phone calls.
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Any other evidence which is appropriate; e.g. comparison quotations.
Having gathered your evidence, the directors should be the first to formally confirm your unhappiness in writing. Normally this would be addressed to the property manager and/or administrator you normally deal with at the managing agent company.
If the formal confirmation doesn’t remedy the problems, then the resident directors should formally confirm the situation to a director of the managing agent company.
And if the problems are still not remedied, the next step would be to make a formal complaint – following the Complaints Procedure, which almost every managing agent firm has in place. That complaints procedure may take many weeks or months to complete, but it’s important to follow it … and it is always possible that procedure will lead to the improvements you seek.
Alongside the above, your resident directors can always be researching and talking with potential new managing agents … using the time spent on the complaints procedure to usefully prepare for the future.
If you’re in our geographic area and are thinking about the possibility of instructing a new managing agent you might welcome a free, no obligation, informal conversation. If so, you can schedule an appointment using the button below.
If you’re outside of our geographic area – we suggest you start your search for a new agent by searching the ARMA membership database. You can find it here.
In Summary
You now understand that changing managing agent is a fairly lengthy process. There are quite a few steps to go through and questions to answer. We suggest you,
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Re-read this guide, together with your fellow resident directors … and all the leaseholders, if appropriate.
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Put together a list of actions to be undertaken … and allocate a couple of people to be responsible for progressing each task.
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Work out a rough timetable for the process – and schedule a series of dates to meet, report on progress and agree next steps.
Being ‘business-like’ and objective will aid the process and your progress.
We hope you’ve found this guide useful and that it’s helped you clarify your situation. We also hope it helps you progress and bring about a happy future at your block of flats.
Best wishes,
Paul
Paul Casserly
Casserly Property Management
P.S. If you've found this article interesting, informative or useful in any way, please share it using the following links. And I'd love to hear your thoughts, as well. Just leave your comments below. Thank you.
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