21 minute read
Appointing an agent
Your block needs a property manager. What do you do next? On the following pages we look at the benefits and pitfalls of appointing a managing agent and offer some advice about what to do if your agent doesn’t provide the level Appointing a of service you expect managIngagent
*successful The role of a managing agent is complex and requires a professional approach to get it right. To carry out the role ly requires knowledge of landlord and tenant legislation, an understanding of building construction, familiarity with the health and safety regulations, basic accounting and more. Before you appoint an agent, here are some of the aspects you and your fellow RMC directors should consider.
First, draw up a schedule of all the services you need from a prospective agent. The Association of Residential Managing Agents (ARMA) provides a checklist (see website details at the end of this article). Make a shortlist of potential agents - ask other flat owners or fellow residents in your own block for their recommendations as well as going to the websites of local agents to get basic information about their location, services and contact details. Is my agent properly qualIfIed?
When you are appointing an agent to manage your block, look out for firms that carry membership of an established professional trade body.
Appointing a qualified agent offers you protection against negligence and access to an official complaints handling procedure if something goes wrong as well as insurance protection for your service charge money. It also means that the agent you use is likely to offer a higher quality of service than a company that is unregulated. askIng the rIght questIons
Always invite potential agents to come along to meet you informally before asking for a formal tender. Make sure you have a copy of a standard lease for the block and an annual statement of accounts. Any good agent will want to look at these if they are to tender for the job. At the meeting there are a number of issues that should be raised: n Be upfront about any problems you think will need to be tackled such as current debtors, relations with any existing or former agent
meet potential agents before asking for a formal tender
“Ithinkthemostimportantservicesamanaging agentcanprovidearesoundfinancialcontrol/ accountingand independentprofessional judgement. Thepositionisfundamentallyoneoftrusteeshipand ifthisisalwaysattheforefrontofanagent’sthinking thenmanyconsequencesfollownaturally,including theneedforbestvaluepurchasing,financial transparencyandarespectfortheinterestsofthe beneficiariesofthetrust,whoarethelessees. ”
duncan rendall, chairman, Rendall & Rittner
and the state of the block’s current finances. The agent will ask you a range of questions to determine what he or she might be taking on. n Find out who will be your key contact if the agent in question takes on your property management. Be sure to emphasise that you want to meet that person in advance of making a decision. Also ascertain what will happen if that person is sick or on holiday. n Find out who will handle phone calls and emails from RMC directors and flat owners. n Who will choose contractors that are used to carry out works on your block? Do you want to retain final approval? If so, make that clear from the outset. n Ask about disclosure of commissions –
including insurance if this is something you want the agent to arrange for you. Agents shouldn’t take any commissions from service contracts unless they are agreed in advance by the RMC directors. n How often will you get financial reports on service charge income and expenditure? Will you be able to see the invoices and receipts documents at regular intervals?
Once you have a shortlist of agents, speak to the RMC directors in other blocks managed by those agents. How happy are they with the service they are getting? Don’t forget to check out any references or testimonials you have been given. “Comparingmanagingagents’chargescanbelike comparingappleswithpears.Manyagentswillquote alowmanagementfeebutderiveallsortsofother incomefromthemanagementofadevelopment, whereasotherswillcharge an all-inclusivefee. Leaseholdersshouldtotalupallfeesreceivedbyan agentinordertomakeapropercomparison.”
Ben Jordan, managing director, Premier Estates
Does my agent have the right insurance?
It is important to confirm any prospective agent’s professional indemnity insurance. If the agent is a member of a professional or trade association PII will be an automatic condition of membership. However, the existence of the cover – and its scope – should be checked. Where an RMC/RTMCo delegates tasks to a managing agent, the residents’ company will still be legally liable for any neglect, omission or mistake made by the agent. So you must be sure that the agent has the means to pay compensation or damages should the worst case scenario unfold.
Working to coDes of Practice
Any managing agent you appoint should work in accordance with approved Codes of Practice. The government has to-date, approved two codes for use in the residential leasehold market. One is produced by the Association of Retirement Housing Managers (ARHM)
What happens if it all goes Wrong?
With the best Will in the world, sometimes a relationship just doesn’t have a future. If you find that your managing agent isn’t providing the service you need, or you simply don’t get on with each other then it is probably best to cut your losses and move on. But how easy is it to terminate your contract?
First, check your management agreement. The terms and conditions should set out the period of financial position of your block – is the service charge account in credit or debit? n Are there large, outstanding arrears that will make it difficult for another agent to provide services? If you are not sure, ask the current agent. n Is your existing agent owed any unpaid management fees that may be disputed? n What documents will be handed over to the new agent so that management sort of accounting statement will be drawn up as at the date of termination? Do you need an external accountant to check it and if so, who will pay the fee?
These practical aspects of property management and service charge accounting are very important and if dealt with correctly will save a lot of time and effort all round. Never simply appoint a new agent and expect him/her to sort out a mess. The RMC directors
notice required for you to terminate your contract. If there is no period specified, you and your fellow RMC directors must decide what period of time would suit you best. Important aspects to consider include: n If it is appropriate, arrange to terminate your agreement on a date that fits in with service charge payment periods or the end of the accounting year to make handover and accounting easier. n What is the current agent so that management can carry on smoothly? Draw up a list of what you require or ask the new agent to propose a list. n What should try to establish the true extent of any previous or existing problems and be honest with the new agent about these issues and the reasons why they have occurred. Dealing with messy handovers from the previous agent is not part of your new agent’s remit – if you leave him or her literally to pick up the pieces, you may find yourselves with an additional fee before you have started working together. ●
Don’t expect your new agent to pick up the pieces and one by the Royal Institution of Chartered Surveyors (RICS) and they are to be used by agents working for flat owners paying variable service charges, not on retirement schemes. When appointing an agent, always ask the company to confirm that it complies with the relevant code. DraWing uP a contract
When drawing up a contract with your agent, you have two choices. Either ask your solicitor to draw up the contract for you or ask the agent to use one of several models developed by the relevant professional bodies. These cover most situations and can be adapted to suit the needs of your block. Make sure you include in the contract a list of documents that will have to be passed on if the contract ends.
No agent can work in a vacuum. It is critical to the future success of your relationship with your agent that certain arrangements are established at the outset. These include: n What responsibilities and authorities the agent will have; n How much service charge money they can spend without the authority of the RMC directors; n Response times and other timescales for action; and n The authorised lines of reporting and communication.
It is also vital to determine who will be instructing the agent – this sounds obvious but it is easily forgotten. Property managers can’t work if given conflicting instructions from a number of different people. Appoint one or two key contacts and ensure the agent knows to refer to them if he or she is asked to do anything by someone else. It is also important to remember that your agent cannot accept instructions from anyone, whether an RMC director or a flat owner, which would put him or her in breach of any landlord and tenant law, code of practice or other statutory guidance such as health and safety legislation. ask arma
ARMA produces a very useful guide to Appointing a Managing Agent which provides RMC/RTMCos with plenty of background information on this subject as well as a checklist of useful questions to ask prospective agents, a checklist of services and a sample letter inviting tenders for property management. To download a copy free of charge, go to www.arma.org.uk ●
Do GOOD managing agents really exist
PAuL CASSERLy tells FlatFlat LivingLiving why why he he becamebecame a property manager
Locallybased managers can be called out quickly
AFTER APPOINTING SEVERAL managing agents for new residential developments in the North West of England, regional developer Castle Homes North West thought the answer to the question of whether there is such a thing as a good property manager was a resounding ‘No’. Witnessing the frustration that poor management creates and having a sense of obligation to their clients, the company took the decision to manage their own properties. In 2008 Casserly Property Management was established in Manchester, with leaseholder’s needs as its core value.
“From our own experience we knew leaseholders did not want to report a problem to a faceless call centre where the person to whom you were speaking had never visited the city you live in, never mind your development,” says director Paul Casserly. “Residents do not want to send an email to customer services@..... they want to contact their personal property manger directly and easily.” Paul is firm in the belief that property managers should know about the development you live in and should have met you at a residents meeting or AGM. His view is that residents also want a property manager whose office is only a short drive away and will therefore visit your development regularly to undertake site inspections, ensuring any issues are dealt with quickly before they become a problem. “Equally, if managers are locally based, they can be called out quickly to resolve a problem anytime,” he says .
Would you employ a letting agent in London if you wanted to rent out your apartment in Manchester? The answer is undoubtedly ‘no’. So why would you employ a managing agent based in another city to manage your whole development? Casserly Property Management recently took over an apartment block in Manchester that had been managed by an agent from London who, unsurprisingly, had never visited the block during its whole time as managing agent. Paul thinks perhaps David Cameron’s localism agenda has a point after all.
It is not only a local service that makes a property manager worth appointing. In Paul’s experience, leaseholders also want an annual preventative maintenance programme that avoids expensive reactive call–out charges, as well as unnecessary inconvenience to themselves such as the lift breaking down or the automatic gate to the car park not working. They also want to know that buildings insurance and contractors’ costs will not automatically rise year-on-year even
in a recession. “This is the quickest way to give the impression that the managing agent simply does not care how much the service charge cost is,” says Paul.
Some managing agents seem to think that if they don’t respond to residents’ problems or questions they will eventually stop contacting them and leave them alone. The end result of this is that leaseholders assume poor service is the norm. “Relying on the apathy of leaseholders seems to be embedded in the values of poor managing agents,” says Paul. So what is the solution? Paul’s advice to leaseholders is to remember that their managing agent works for them. “The managing agent is often on a yearly contract and hence has a year to deliver a first class service. If they fall below par it is the leaseholders’ prerogative to replace them with a more competent one. This is often delayed or put off because to change managing agents is presumed to be a long arduous process.” In fact contrary to popular belief, it can take little more than a phone call to the right ARMA accredited managing agent who will guide you through what is really quite a simple process (turn to p48 of this issue for more on changing agents).
Paul believes that many residents in blocks around the country have put up with poor service from their property agents for far too long and a customer service-focused approach is long overdue in the industry. In answer to the question “Do good managing agents really exist?”, his answer is “Yes, as long as you choose wisely”. ●
Casserly Property Management Manchester-based Casserly Property Management was established as a Managing Agent in 2008. The company currently manages 20 developments. Paul Casserly can be contacted on: Tel 0161 787 6197 Email paul@casserlypm.co.uk Website www.casserlypm.co.uk
Getting itright first
timetime
RMC director alaN WalkEr offers somesome tipstips for ffor findinginding the rthe rightight managermanager forfor youryour blockblock
First oF all, know what you want when you plan your search. I have served on two boards, one in a development of 38 flats and one of around 160. On the face of it, these are very different estates, but size is not necessarily important. In my experience, the services and approach required from a managing agent are much more strongly influenced by the history of the block management and the working style of the RMC board than by the size of the block in question.
For example, an RMC which has previously self-managed and is looking to take on an agent for the first time may be looking for a partner to provide advice on the increasingly complex legislative environment and offer ‘light touch’ support. It is essential to the smooth running of the search and selection process that the RMC is clear about this, and that they communicate it clearly to potential agents.
Where a board is seeking to change its managing agent, they should take time to consider carefully the reasons why they want to make the change. Identify the things which are causing dissatisfaction with the existing agent and which the new agent should do differently.
If a board finds it is changing agents on a regular basis, they should not be afraid to take a look at the politics and processes of the board itself - is the common thread of dissatisfaction bound up in the actions or approach of the RMC rather than with the appointed agents?
Ask for recommendations from RMCs on other estates which you know to be well-run. Always interview potential agents, and take up references; make sure you see the team who will look after you rather than just the new business team – they may be quite different. Chemistry is vital to the relationship - this is not just a business transaction, this is about people’s homes and lives. It is necessary to commit time and thought to your search – but well worth it to find the right agent for the block.
Building a working relationship
Once you have found the right agent, you then have to work together to ensure your block is effectively managed and that the agent is fulfilling your expectations. The key to this is communication, communication, communication.
Make sure the appointment process involves a clear brief – and retain this rigour as you set out and update your aims and objectives for the estate as you work alongside
the agent. Always double-check that your agent has understood your requirements and instructions. What is said and what is understood may not be the same thing.
Set up formal and open lines of communication – with regular updates from the agent to the board so that it is clear to all members, and indeed to the agent and partners, that matters are in hand and progressing.
Laugh a lot, talk often and meet regularly
potential proBlems and how to Beat them
There are a few common issues that cause problems over and over again in the relationship between RMCs and their property managers. I have listed the ones I have come across most frequently. n Misunderstanding – it is important to remember that people can attend the same meeting and hear the same discussion yet come away with entirely different impressions of what was said and what is to be done next. n lack of clear instruction – it is very important for RMC boards to make sure that discussion around topics of interest is always closed with an instruction, whether it be to research the question further or to act. n time-lag - time lost between meetings when a board expects action and the agent awaits instruction is frustrating and unconstructive for both parties. n Not communicating problems quickly enough or in enough detail to enable them to be handled – as with any board of directors in any commercial company, the motto should be ‘no surprises’. It is essential for boards to have news of problems or of possible difficulties ahead, whatever their nature, in order to plan and act to mitigate or avoid them.
All of these problems can be avoided or overcome through clear and regular communication. Chemistry is vital to the relationship
getting the Best from your manager
My best advice is to laugh a lot, talk often and meet regularly. Treat the management of your block as a professional working relationship – read what the agent sends you; prepare fully for meetings; listen as well as speak.
Make sure you select an agent who understands that this is not just any job, but is about people and their most valuable asset – and thus... a very important working relationship for RMC directors who are personally involved in the estate. ●
alan Walker Director, Streatham Manor Gardens Ltd, SW16 Email alan_walker@fastmail.fm
Let me tell you what I
Managing agent KiM WArd takes f lat owners through the selection process and offers some tips for a smooth working relationship Want
BEforE stArting thE selection process for a managing agent, the directors of the management company or residents’ association should prepare a clear and detailed brief. This is the best way to establish whether or not the prospective agents they are meeting are best placed to provide the services required.
First, draw up a schedule of the services you expect from a prospective agent. Your lease and last year’s actual expenditure will assist with this process. Review the areas where you would like to see improvements and then discuss openly any current problems with your prospective agents. This will give them a clear understanding of the current situation and their suggestions for overcoming these obstacles will either reassure you of their ability to manage your block effectively or take them off your shortlist. It is also important to reach an agreement on selection of contractors and any authorised spend limits.
Discuss with each agent their experience of attending the LVT (Leasehold Valuation Tribunal) and court hearings. This will be useful if there are arrears to be recovered or if other disputes arise.
To ensure that you will be receiving a professional service, ask about staff training and/or qualifications. If they are professionally qualified agents they should have a formal complaints procedure in place. Check that this is the case and that it offers clear time frames for resolution. Any agent you appoint should have professional liability and indemnity insurance to protect against negligence claims.
Keep on talKing
Once you have selected a firm of managing agents, ask to meet with your property manager. It always helps to put a face to the name and will help your relationship to start on the right footing.
From the outset, confirm to your designated property manager your requirements so there can be no misunderstandings at a later stage. Set down on paper or in an email your preferred method of communication, the frequency of updates, regularity of meetings and details of the information you require on a
regular basis. Also make sure the agent knows when he or she should be seeking authority from the RMC/RTMCo to carry out works or take decisions on your behalf.
You may wish to arrange to meet with your property manager when he or she carries out their periodic inspections of your block. This way you will be able to discuss any particular issues in person and will also be aware of the issues being noted and the action the agent proposes to take. Perhaps most important, this is a good way to maintain a relationship and it will provide your property manager with an ongoing understanding of your requirements.
tacKle problems early
In order to maintain a good working relationship with your managing agent it is best to deal with problems before they become a cause for complaint.
The first step is to call or email your property manager to provide them with details of the problem or query. If it is a more complex query, then email is preferable. Ask them if he or she can look into the matter and then call you to discuss. This would be a good opportunity to discuss the query in more detail as the property manager will have put aside time to concentrate on the query in hand.
If you are unclear on any aspect, ask your agent to clarify. Similarly if he or she refers you to a covenant within the lease or section of the law, get them to explain in simple terms what it means. If necessary, request an appointment to discuss the matter in person.
Leaseholders and directors can obtain free useful advice from www.lease-advice.org
Remember………..Your agent will be as keen as you are to resolve any difficulty. ●
Kim Ward MARLA, Business Development Manager tel 0208 315 5548 Email kim.ward@acorn.ltd.uk Acorn Estate Management, 19-23 Masons Hill Bromley BR2 9HD Website www.acornestatemanagement.co.uk
cAsE study the CloCk houSe: under new management
Acorn EstAtE MAnAgEMEnt had managed the Clock House, a listed conversion inBromley, Kent on behalf of the Resident Management they could save costs by self managing the Clock House but the directors found it difficult to juggle full time work commitments while managing the development. This led to a number of the flat owners becoming dissatisfied and withholding their service charges.
The directors were unable to collect arrears so opted to instruct a small maintenance company that had turned its hand to estate management. The RMC directors instructed the new agent to change the service charge apportionments, but unfortunately these did not correspond with the lease.
The arrears situation worsened to the point where the majority of leaseholders were withholding service charges. There were no funds for maintenance or insurance. No service charge or company accounts had been prepared and the RMC was due to be struck off at Companies House.
Two of the leaseholders then overturned the existing directors and took the decision to re-appoint Acorn Estate Management.
Acorn quickly stepped in to resolve the situation. The managing agent organised for the RMC directors to make a loan to the service charge account, allowing for basic management to resume. Acorn was then able to: n Resolve issues with Companies House n Work with the out-going
agent to establish facts, figures and calculated funds owed to the service charge account n Arrange for all accounts to be drafted Residen n Collect all the service Company from initial charge arrears. redevelopment of the 13- Within 12 months unit block in 2005. of taking over, all
New RMC board leaseholders at the Clock directors were then House are now onboard appointed, who and cyclical maintenance decided works are underway. As Acorn’s Kim Ward points out, changing your agent is not difficult but if you find the right property manager from the outset, it should be unnecessary.
development. This led to a number of the flat di withholding their service charges. to instruct a small ma tu
