Flat-Living.co.uk ARMA
HANDOVER OF SCHEMES AND FEES
ARMA encourages competition between agents and competitive levels of fees are part of normal business activity. If an agent is to take handover of a scheme previously managed by another agent we believe that caution should be exercised. In particular, the prospective agent needs to be aware if there are any disputes over unpaid fees and whether documents and funds available for continuing management are available. The prospective agent should ask the client to give access to the previous agent before handover with the ability to gather enough information to ascertain whether the fees proposed are sufficient for the problems that may be handed on from the previous agent. ARMA also believes that agents should consider a one-off charge
for work involved with the handover of management and the taking on and setting-up management by a new agent. It is ethically wrong for an agent to undercut a previous price if
it knows that it cannot then devote the staff and other resources required to deliver the services promised at the price proposed.
DISPUTES ABOUT MANAGEMENT FEES
A client is quite entitled to dispute the fees charged by an agent even though the fees billed are as set out in the management agreement. If a client does dispute the fees charged then agents should furnish with the fee account or on request without further charge such details and evidence required to allow the client to understand the basis for the charges and the level of service provided. If an agent claims fees that are not in accordance with the
management agreement or estimate provided in advance then the agent should provide, at the time of billing, a full and detailed explanation of the reasons for the difference.
THE LAW AND MANAGEMENT FEES
Any management fee charged by a landlord under a long residential lease is subject to the Landlord and Tenant Act 1985 definition of service charges (S19). So that fee can be challenged by any lessee as to its reasonableness and payabilty (S27A) before a Leasehold Valuation Tribunal.
ADMINISTRATION CHARGES
Many items which lessees may regard as management fees are not such as defined in Landlord and Tenant law. Only the standard fee for the provision of services and fees for major works and long term agreements will fall within the definition of management fee used by Leasehold Valuation Tribunals. Other fees such as those for alterations, subletting, registration of
assignments and deeds of covenants are classed as administration charges and can be challenged as to their reasonableness and payability at LVTs. These fees will normally be agreed with the client as part of the management agreement.
Association of Residential Managing Agents Limited (ARMA) 178 Battersea Park Road, London SW11 4ND Tel: 020 7978 2607 Fax: 020 7498 6153 Email:
info@arma.org.uk Website:
www.arma.org.uk
ARMA Lesse Advisory Notes also available from
www.flat-living.co.uk and
www.arma.org.uk
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