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Clear benefits frombetter regulation

Better regulationis longoverduein our industry, says JonaThanSmiTh, managingdirectorandCEOof Trinity Estates.Unfortunatelythere is awide rangeofunscrupulousagentsout therewhoareabletotrade alongside thosewhoare tryingto cleanupthe image of propertymanagement

Without regulation, best practice is atoothless tiger...

charge expenditure relating to a specific scheme.Inaddition, they ensure that they have sufficient fiduciary insurancetoensure that allclientfunds areentirelyprotected in thecaseoffraud. TheRICSCodeofPracticehas beenapproved

by theSecretary of Stateinaccordance with Section 87(7)ofthe LeaseholdReform, Housing and Urban Development Act 1993. Butwhat does thatmean in real terms? ‘Approval’does notmake a breach of the code a criminal offence;nor does it create acivil liability.Asa result,lessscrupulousmanagingagentscan simply choose to disregardwhatisatthe end of theday simply ‘best practice’. This is of particular concern, giventhat

somevolunteerResidentManagement CompanyDirectors have only alimited understandingofthe risksand issues surroundingthe handling of client’smoney.

Consumer ProteCtion As things stand, there are very few- if any - consequences for poorly performing managing agents.Addedtothis, anyone can choose to becomeanagent.Createaplausible enough image andyou have thepotential for acompletelyinexperienced andhopelessly inadequatemanager to become responsible overnightfor complexcitycentreschemes, includingmanaginghundredsofthousands of pounds of client’smoney, complexmechanical and electrical equipment (such as lifts) and inmany cases,eventhe quality of residents’ drinking water. Yetthere arenochecksand

Flat Living Spring2012

There are a number of agents like Trinitywho are trying to work together to ensure residents areprotected butuntil a government-backed ‘licence to trade’ is introduced with an audit criteria it will be difficult to regulate. At present agents do not need to be amember ofARMAto trade and anyone can set up their own company and pose as an expert. Under current conditions there is absolutely no protection for the end user unless theirmanaging agent is amember ofARMA. A condition ofmembership is that theymust offer access to an independent Ombudsman at no cost. However, there are no major barriers to bettering our performance and it is downto the agents themselves to improve.Our industry is notoriouslypoor for customer services but this is gradually improving among the larger firms. Propertymanagement hasgrowndramatically overthe yearsashas the expectation of residents. Owners are nowmuch

more aware of their rights but are still, in themain, uneducated abouthow propertymanagement works, especially in relationtohow service chargemoniesare handled. Thereneedstobe more, simple information available explaining the role of the agent and what they do for their managementfee. Solicitors need to take

greaterresponsibilityfor explaining thekey pointsof the lease so that purchasers aremoreaware ofwhat they are buying. Thebenefits ofabetter regulatedmarketplace are clear.For theleaseholder therewould be greater security of their funds and better value for money on theirmanagement fees. Themain benefit would be greaterrecoursefor poor management. Currently the LVT process looks at the actual charges levied via the service charges and whether they are fair and reasonable, not at the true performance of agents. Nobody is askingwhether residents areactually gettingvaluefor money

andwhether the agent is deliveringwhat has been promised. ARMAaredoingwhat they

canandarepushinginthe rightdirection,butIstilldon’t thinkthis isenough:until theygetsupport fromthe government thenthey willbe limitedwith theirpowers. If ARMAisnotfully regulated thenwhatdoesitmatter if youareamember ornot, as agentsare at libertytotrade without limits. Until the government sits up and takes notice ofARMA and itsmembers and also themany people affected by this industry and actually does somethingtoregulate it then leaseholders are always goingtobeatthe mercy of unscrupulous traders. Likewise, agents who dowork within the guidelines and look to improve themare tarred with the samebrush as therogue traderswho are damagingthe industry and spreading distrust. TheGovernmentmust supportARMAand look to implement a trading licence which isawarded to agents whomeet strict criteria which is audited annually.

ourindustryisnotoriously poor for customer services butthisisgradually improving


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