John Williams

Bob Smytherman 28 John Williams 29 Paul Robertson 30 Letters 31 Jonathan Smith 33

TheThe government’sgovernment’s refusalrefusal to to regulateregulate thethe leaseholdleasehold sectorsector doesdoes us us no no favoursfavours

In my last artIcle I ranted about red tape and how unnecessary and burdensome regulation leads to greater expenditure for leaseholders. This time round, following on from the comments made by other contributors in the last issue of Flat Living, I want to focus on regulation of leasehold management.

We are now seeing ever-increasing calls for compulsory regulation of managing agents in place of the current system of self-regulation. A one hour debate was initiated in the House of Lords on 23 April by Baroness Gardner, calling for simplification of the law; consolidation of the various Acts of Parliament; regulation of managing bodies; transparency; complaints processes; closing loopholes; easier change to commonhold; right to manage; standard of services and value for money. The debate was concluded by Baroness Hanham (Under-Secretary of State, Department for Communities and Local Government) confirming that the Government has no plans to intervene as it believes there are sufficient routes of redress for unsatisfied leaseholders.

In March, the Planning and Housing Committee of the London Assembly published its review into service charges in London. The terms of reference were to understand the nature of service charges in London, how they are calculated, charged and administered by landlords and paid for by leaseholders. The aim of the review was to look at ways the relationship between leaseholders and landlords could be re-balanced, with particular focus on the way transparency of service charges can be improved, giving leaseholders greater control over the way services are provided to their homes.

The 80 page report makes nine recommendations (most to be undertaken by the end of 2012) and clearly a lot of time and effort has been invested in this review. However, I do not believe it has gone far enough and the one-size-fits-all approach for public, retirement, social and private housing has confused the issues. What might be done by a local authority may not be achievable by a managing agent trying to make a profitable living in the private sector. My thoughts are therefore mainly confined to the private sector.

Part of me wants compulsory regulation as it will result in fewer managing agents and a rise in fees. That is good for managing agents in an undervalued sector, but clearly not good for leaseholders who will see service charge bills rising. The other part of me, already regulated by ARMA and RICS, shudders at the thought of yet more regulation. Proper regulation does not come cheap as RICS has found out to our cost.

There will always be the criticism that self-regulating professional bodies have a vested interest in looking out for the members who fund their costs. However, having been heavily involved in RICS for many years, I know that is not the case. In any event there is already the requirement for both ARMA and RICS members to have a complaints handling procedure, to subscribe to an independent ombudsman scheme and be able to demonstrate they hold service charge monies in the correct and legal format.

Government maintains it does not want to intervene, but has said it will keep a monitoring brief. Well, quite frankly, that does not help leaseholders or managing agents. So what is the solution in the short term? n We need better promotion of the benefits of self-regulation. This will ensure leaseholders only select managing agents who are members of a relevant professional body such as ARMA or RICS. I am a massive fan of ARMA. It produces a wealth of information through guidance notes and weekly email bulletins to managing agents and free advice to leaseholders. n Leaseholders need to be better informed - although I do not believe they are as dim-witted and gullible as some have made out! Nevertheless, as managing agents we need to provide more information at the outset, particularly when dealing with replies to solicitors’ enquiries by providing more general information (for example The Guide to Living in Leasehold Flats published jointly by ARMA, LEASE and ARHM or 21 Ways to be a Great Leaseholder produced by ARMA) to be passed to the purchasing leaseholder by the solicitor. n Leaseholders should be actively encouraged to get involved in the running of their building/estate. The best run blocks are those where there is a strong team approach by the managing agent in tandem with active leaseholders. Far too often there is a single leaseholder who shoulders the unpaid and thankless burden. n ARMA (in consultation with RICS and ARHM, FPRA among others) needs to draw up a charter setting out minimum service standards expected from their members, over and above the RICS Service Charge Residential Management Code (including insurance commissions and accounting.) n ARMA needs to continue to tackle government on regulation and making it easier for leaseholders to take over the management responsibilities.

In summary, we need clear, concise guidance to the roles and responsibilities for both the leaseholder and the managing agent – the continued lack of government action gives us all a headache! ●

We need clear, concise guidance to the roles and responsibilities for both the leaseholder and the managing agent

Baroness Gardner speaking in the House of Lords

JOHn WIllIams

Director of Management and Professional services at chartered surveyors Aston Rose Tel 0207 629 1533 Website www.astonrose.co.uk