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You are here: Home / News / Competition and Markets Authority / OFT / CMA: easier right to manage, re-tendering property management when residents choose, changes to major works rules … but no statutory regulation of block managers

CMA: easier right to manage, re-tendering property management when residents choose, changes to major works rules … but no statutory regulation of block managers

December 2, 2014 //  by Sebastian O'Kelly

CMAlogoLKP

… And CMA may re-examine sector if no improvements

Below is the press release of the Competition and Markets Authority, whose report into property management was released today at 11am.

LKP will be providing a full analysis later.

Jim Fitzpatrick, LKP patron and Labour MP for Poplar and Limehouse said:

“The CMA report represents the sector’s last chance to regulate itself. While the CMA accepts a number of agents on the sector do a good job, the report has highlighted some of the poorer practices.”

Brandon Lewis, the housing minister, commented with reference to the revised leasehold figures provided by LKP:

“With more than 4 million properties across England subject to a long lease, leaseholders are a vital part of a growing housing market. 

 “This Government has already increased protection for leaseholders, with new laws against unreasonable maintenance charges now in force, as well as a requirement for every property manager to belong to a registered redress scheme. We will now work closely with the Competition and Market’s Authority to consider what further support the Government can offer.”

The full report can be read here:

https://www.gov.uk/cma-cases/residential-property-management-services

The Competition and Markets Authority (CMA) consulted extensively with consumer groups, leaseholders, the industry and government during the course of its study. It found that overall, while the market works well for many leaseholders, some have experienced significant problems in a sector where total annual service charges are estimated at £2.5 to £3.5 billion.

The issues identified include leaseholder frustration at a lack of control over the appointment of property managers, high charges for services arranged by property managers or poor standards of service, leaseholders suffering unexpected costs and being charged for works they consider unnecessary, poor communication and transparency between property managers and leaseholders, and difficulties in getting redress. The CMA has also identified some concerns about prospective purchasers’ understanding of leasehold, and their obligations and service charge liabilities for leasehold flats.

In light of its findings and on-going developments in the market, the CMA has made a number of detailed recommendations aimed at improving:

prospective purchasers’ awareness of leaseholders’ obligations
disclosure, transparency and communication between property managers and leaseholders
leaseholders’ access to appropriate forms of redress.
These recommendations will make leaseholders better informed about the responsibilities and performance of property managers, while greater transparency will increase pressures on property managers and landlords to take account of leaseholder interests. They will also provide improved mechanisms for dispute resolution, should issues arise that require action.

The CMA is also recommending changes to legislation affecting rights of consultation relating to major works, as well as supplementing the existing Right to Manage legislation to enable leaseholders, where there is a majority in favour, to require the landlord to re-tender the property management of their block.

The CMA is not recommending that property managers should be subject to more formal regulation by government. For many the market works reasonably well, and satisfaction levels are particularly high where leaseholders have exercised their Right to Manage. Existing legislation provides significant protections for many leaseholders, and the sector has engaged constructively with the CMA during the course of its study, recognising that there are improvements to be made and showing a willingness to address the issues that have been identified.

Rachel Merelie, the Senior Director at the CMA who led the study, said:

Many property managers provide a good service to leaseholders, but protection against the worst failures by property managers is vital because when problems do occur they have a major impact on leaseholders.

We are pleased that within the sector there is a consensus that change is needed and a genuine willingness to be part of that change. This is evidenced by the new and revised self-regulatory codes of practice and the enthusiasm of key players, including property managers, to improve how this market functions.

The CMA intends to work with the sector and government to implement its recommendations. However, should these not prove to be effective in addressing the issues identified, the CMA may choose to re-examine the market in due course.

Related posts:

Competition and Markets Authority issues update on leasehold study Newcastle City Council reneges on allowing residents to choose management Pensioners ‘turn to old Peverel politburo at Freemont Property Managers for right to manage’ ARMA regulator Sally Keeble outlines five areas where statutory regulation is needed in leasehold Government to ‘take forward’ CMA leasehold report, but rejects making right to manage easier

Category: Competition and Markets Authority / OFT, Latest News, NewsTag: CMA, Competition and Markets Authority

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Previous Post: « No change over Cirrus retirement scam, says Entwistle, although Peverel leaves an open goal for compo claims
Next Post: Quadrangle House residents seek to regain control of their RTM »

Reader Interactions

Comments

  1. Chas

    December 3, 2014 at 4:49 pm

    The Scope of the CMA Investigation was as follows regarding:- leaseholders’ perceptions of value for money and the Quality of services, they receive.

    Q. Whether leaseholders have sufficient understanding of their rights and obligations with regard to the management of property:-
    A.The understanding of the leaseholders rights and obligations will never be sufficient until the Estate Agents and Solicitors provide proper information to the new purchasers?

    Q. Whether leaseholders have sufficient influence on decisions taken by freeholders in relation to the appointment of property managers, and subsequently in the supply of RPMS.
    A. We have no influence at all on the decisions taken by freeholders in the relation to appointed property managers, when MA such as Peverel Management Services Ltd have been given a so called contract for life, which is against the very principle of Markets & Competition.

    Q. Whether property managers and freeholders have the same interests as leaseholders in areas such as costs of maintenance work and/or buildings’ insurance and how such decisions are made.
    A. How can property managers and freeholders have the same interest as leaseholders, when the cost of maintenance is carried out by a Subsidiary who Price Fixes to win the contract, then gets paid again by the Stooge Contractor who Sub-Contracts the works for far less money. The same as the commissions when Peverel Retirement use a Subsidiary Company, Kingsborough Insurance to act as a go between, who brings in Oval Brokers, who pay excessive commissions to their Sister Company (in the past over 40% between them) who then passes the Commissions on to the Managing Agent, Peverel Management Services Ltd as stated by Chris Owens, Director of Customer Services?

    Q. Whether property managers’ and freeholders’ choice of contractors and services may be influenced by any links with associated companies and the availability of commissions.
    A. The choice of contractors and service was set up to use in-house Subsidiary Companies, by purchasing CarelineUK, Cirrus Communications, Kingsborough Insurance and then being able to receive other payments as they keep Contractors who pay them retainers for using their services and products, or add on charges from Utility Companies?

    Q. How leaseholders’ rights to self-management work in practice; for example, whether there are difficulties in coordinating leaseholders to work collaboratively, whether self-management gives good outcomes, and whether any problems may be more marked in some areas, such as for retirement properties.
    A. Our late Regional Manager worked tirelessly to prevent us going down the RTM route, telling porkies along the way, which were later found to be incorrect. He was supposed to help me set up a Residents Association but did nothing, constructively.

    Q. Switching levels’ and more generally whether competition between property managers is working well.
    A. Why would Switching Levels ever be considered as the Golden Goose is not given to the peasants.

    Q. The current and proposed redress and complaint schemes available to leaseholders and any problems with those schemes, including the standard of customer service.
    A. How do these benefit leaseholders, having been through a Level 1. & 2. Complaints Procedure with Chris Owens Director of Customer Services for Peverel Property Management Ltd was like the Master & Servant Roll in Upstairs Downstairs where we as leaseholders are the Servants.

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