The former ARMA regulator Sally Keeble, who resigned her post last month claiming unacceptable interference in her independent role, outlines for LKP five areas where statutory regulation in leasehold is required.
The full reasons for her resignation are given here
In her article below, it is clear that Mrs Keeble – a Labour MP for 13 years and former leader of Southwark Council – believes that self-regulation by the leasehold sector has failed.
By Sally Keeble
Self-regulation of the residential managing industry was an important initiative that held the potential to be able to improve services across the sector for leaseholders, and exclude the cowboys.
However, in a fiercely competitive commercial environment, implementation has been difficult.
Self-regulation is voluntary, and a large number of companies have opted out, or have never been able to meet the basic standards required for membership of the scheme.
Mandatory standards are limited, and recommended standards do not have to be met – they are advised as best practice, but cannot be enforced.
Resources for regulation have to be met out of membership fees, and there is an inherent conflict between an organisation trying to increase its membership while at the same time applying regulatory oversight and sanction if rules are broken.
In deciding how statutory regulation could be applied, consideration needs to be given to the size of the property.
Regulation may not be necessary or appropriate for a house that is subdivided into a limited number of units that the owners – whether under a leasehold or commonhold scheme – are able to manage between themselves.
A practicable minimum size scheme should be specified, perhaps of four or more units, which would then be required to have a qualified managing agent, who may be a qualified member of an RMC (Residents’ Management Company), and which would be require to meet statutory standards.
During the past year, five key issues have emerged as problematic in a system of voluntary regulation. These, set out very briefly below, would particularly benefit from statutory regulation.
1. Written management contracts
At present there is no requirement for managing agents to have contracts to manage buildings. It is recommended, but is not mandatory.
On a number of occasions, difficulties arose because of apparent lack of a formal contract for the management of some very large and valuable buildings, leaving both leaseholders and agents exposed to risk.
In the current competitive climate, commercial pressures may militate against use of contracts.
There needs to be a statutory requirement for written management contracts to be agreed and signed on appointment of managing agents, with consideration to be given to renewal arrangements and the areas that they should cover. For example: fees and charges, frequency of services, debt collection, staffing arrangements, and contract termination and handover arrangements.
2. Procedures for use of in-house or associated companies
There are a variety of different arrangements for provision of services.
Sometimes these are provided by directly employed staff of the managing agent, sometimes they are outsourced to local firms, and sometimes they are provided by companies that are wholly or partially owned by the managing agent or in which the managing agent has a financial interest.
All methods of service provision can provide equal quality and value for money, but there is a need for transparency.
There is a requirement for managing agents to make an annual statement on this to their client and leaseholders. But there is no prescription of the form that this statement should take.
In addition, apart from section 20 consultations, there is no requirement for regular market testing such as is required in the public sector.
3. Banking requirements for client and company funds
There are statutory obligations in the Landlord and Tenant Act 1987 in relation to holding of client bank accounts. There are also detailed provisions in the codes of conduct of both ARMA and RICS for managing bank accounts and client and company funds.
However, many of these are recommendations rather than mandatory requirements, and practice can be variable.
Given the high level of service charges, and the high level of funding passing through service charge accounts, there is a pressing need for mandatory standards around how these funds are held and managed.
4. Responsibility for health and safety
Health and safety legislation, in particular the Health and Safety at Work Act 1974 and later regulations, place duties on managing agents, and these are well set out in current guides.
The difficulty is enforcing standards are met.
In some cases, leaseholders may be responsible, in other cases the freeholder may be responsible.
It may that neither is willing or able to meet the standards. For example, by meeting the cost of taking down external cladding, or replacing a lift that is beyond repair.
Conscientious managing agents may end contracts where there is a refusal to carry out work required for health and safety, or take action to protect themselves from prosecution. However, some form of statutory regulation is required to provide a solution.
5. Long term maintenance
Recent events have highlighted the need for careful long term maintenance and improvement of high-rise flats, especially to meet health and safety requirements.
There are detailed provisions for consultations about substantial improvements under section 20 of the Landlord and Tenant Act 1985.
However, these consultations can be derailed, and do not necessarily result in necessary improvements being undertaken.
There is a need for some regulations for building up of reserve funds to pay for longer-term maintenance – especially in relation to work needed to meet health and safety standards and protect the public.
Sally Keeble
6.9.2017
Related posts:
Former Labour minister Sally Keeble is new ARMA regulator
ARMA’s self-regulation in disarray after member sues the organisation and Sally Keeble resigns
ARMA regulator Sally Keeble quit ‘after being blocked’ from ruling on Warwick Estates lift shaft fatality
RICS fines Warwick Estates £20,000 over lift shaft fatality – after ARMA ‘blocked its regulator from hearing the case’
Peverel Retirement up before the ARMA regulator before it can join ARMA-Q
ARMA regulator Sally Keeble quit ‘after being blocked’ from ruling on Warwick Estates lift shaft fatality
‘HURRAH’!!! It’s a good start M.s Keeble.
1. STATUTORY REGULATION FOR MANAGING AGENTS.
2. REMOVAL OF RESIDENTIAL ‘FORFEITURE’ From the statute book.
Leaseholders have been exploited for too long by gangsters operating in Residential Property Management. It is BANDIT COUNTRY . ENOUGH IS ENOUGH.
In addition to my post above.
Managing Agents when found to have cheated leaseholders by
1. Charging on false invoices
2. Charging insurance premiums where no such insurance has been paid.
3. Colluding with Insurance brokers in a fraudulent way
4.Harassing leaseholders by demanding irrecoverable and undue monies with ‘Menaces’. This particular nasty tactic has driven aged and gullible leaseholders to contemplate suicide.
These Agents and their complicit shady solicitors must be arrested ,charged with Fraud and Harassment and dealt with in a Criminal Court Of Law.
Nothing else with suffice.
As an X resident caretaker of over 10 years disputing negligence, abuse of Service Charges, waste creation, revenue enhancement, involving LVT and also The property Ombudsmen, if anything treatment from managing agents is getting worse.
since there is no Residents Association and numerous absent Landlords managing agent can run round ring fingers and blatantly show two fingers and no questions asked.
Name and address supplied.
Having read Sally’s comments, I am convinced that she would have been the ideal person for the ARMA Regulators job. What a pity they did not follow her lead.
ARMA now have the choice of total revision of their policies.or just becoming a non entity..
Their education side is very good, but they have no way of making it stick in practise. Which is unfair to thousands of Leaseholders and those Companies who do conform.
So it comes down to being either a Regulatory Body with teeth or just a Trade organisation/ Social Club. The choice needs to be made now.
These recommendations are basic and will barely scratch the surface. Phrases like ‘best practice’ are laughable without some sort of penalty for ‘worst practice’
Councils are the ones keeping the whole shebang from falling apart and they should be given more powers to ensure buildings are maintained to a high standard.
There are two battles going on here, the first is dealing with what is going on now and how to make things better (proper regulation for instance). The second is the goal of abolishing leasehold altogether. The problem with the righteous attempts to achieve proper regulation is the powers that be (government) might well give way and appoint a proper regulator and say “Sorted”, leasehold remains in place.
Governments have only ever tinkered with leasehold laws and they will continue to tinker, and tinker, and tinker, until the cows come home unless the pressure is intolerable.. Government is not on your side or my side, it is not even independent. The pressure needs to be intolerable, only then will government act.
Hear hear! One, two, three, foot on Government’s windpipe and altogether now – press down and apply extreme pressure!!!
One feels faint reading Ms Keeble’s clear alertness to the leasehold cesspit.
For years I have felt we were like David Vincent, “a leaseholder returning home after a hard, hard, day who parks his car in an old ghost town in order to rest…” and discovers aliens have taken over, only recognised by their inability to bend their pinky. We all knew but the government folks didn’t seem to notice.
(Never did learn how David Vincent saved mankind?)
As for managing agents, governments have helped them along as per section 20 consultation (the originally simple right based on a financial trigger which the courts tore up later)…
Agents who had the foresight to form multiple companies for their staff (agent, maintenance, insurance, risk etc) all under one holding company were free of the section:
“an agreement between a holding company and its subsidiary, or between subsidiaries of the same holding company (the definitions following those in the Companies Act 2006)”
I met ‘our’ managing agent for the first time in court, He was barely literate, spoke poor English and did not know what indemnity insurance was. ( I kid you not!) He is also the director of 6 other companies ( all property related) so clearly someone else is pulling the strings. The guy could not make it to the end of the week without help.
Yet the judge did not find enough cause to remove him and he is still ‘mis’ -managing the premises and defrauding the leaseholders- with a little help from his (well hidden) friends.
What kind of democracy allows this to go on?
I received an email from Leasehold house consultation this morning and it read
Dear Kim,
The department will consider your papers as a consultation response”
Best wishes etc.
Does that mean the department will consider considering my ‘papers’ as a response or that they have considered my papers and believe that they are worthy as a response? ( They were rather good I thought)
Anyhoo, I completed the online consultation as well but clearly one cannot go full pelt on that.
Good for you Kim we need to keep on fighting for a fairer world.
Having said that consultations are often used as a means to justify what they have already decided to do…
Leasehold reform,
Yes indeed, we must fight and fight to the end.
The DCLG and The Rt Hon Savid Javid MP must listen to Leaseholders and introduce proper forms of legal discipline and serious financial penalties for individuals who perpetrate their ‘gangster’ tactics in Residential Property Management which causes serious harassment of individual tenants and sometimes whole communities.
THIS CANNOT BE ALLOWED TO CONTINUE.
There must be Statutory Regulation of Managing Agents and
Removal of residential “Forfeiture ” from the statute book.
In 16th Century Italy, Hippolytus de Marsilliis described a form of torture in which water is slowly dripped onto a persons forehead for a very long time allegedly making the victim insane!
These parasitic Freeholders and their nefarious ‘ Managing Agents’ , by persecuting leaseholders with tactics that include threats of legal action from incompetent shady solicitors, demanding undue, irrecoverable monies with menaces,inappropriate threats of forfeiture which have led some particularly aged and vulnerable tenants to contemplate suicide, are, I believe the same drip drip torture tactics which makes leaseholders lives intolerable and drives them insane with misery!
THIS IS LEGALISED TORTURE.
THIS CANNOT BE ALLOWED TO CONTINUE.