Outside the walls of the Royal Institution of Chartered Surveyors (RICS) the reputation of residential property managers is pretty dismal and getting worse.
Huge and impossible bills are being dumped on leaseholders to make good the historic build defects of others, and even government ministers suspect that they will fill their boots with the £5.1 billion of public money being doled out to high rise sites with dangerous cladding.
Inside the walls of RICS – essentially a property lobby that squats across Parliament Square from our elected legislators – it is business as normal.
This time it has dreamed up a tokenistic and cynical “code of practice” to try to stop unregulated and unscrutinised property managers from making off with leaseholders’ money.
It is full of wishful pieties on how property managers ought to behave: insurance commissions and other earners “should” be declared; management charges need to be reasonable and pre-agreed; conflicts of interest should be avoided and even declared “when unavoidable”; the management fee should include the recruiting of staff at sites and they should be trained to “welcome complaints and value them as a way to learn and improve services”.
All fine, and leaseholders are invited to share their views of these worthy platitudes in a consultation that closes on 14 September:
But, hold on, what has happened to independent peer Lord (Richard) Best’s Regulation of Property Agents working ground that issued a final report in July 2019?
It was not advocating code of practice cooked up by the same duds who preside over the current state of leasehold.
“We recommend that the new regulator take over responsibility for the approval of property agent redress and client money protection schemes …
“There are numerous potential sources of complaints against property agents (e.g. other agents, whistle blowers, accountants) that have few if any places to go to raise concerns. The new regulator should be able to consider complaints from all sources. Where solicitors, lawyers or other professionals have evidence of possible illegal agent behaviour, they should be obliged to present it to the new regulator.”
The new regulator was supposed to “work with the sector (property agents, developers and consumers) to draw up the detail of the regulatory codes”.
“The regulatory code should include standards for transparency; potential conflicts of interest (e.g. mandatory disclosure of commissions and management fee charges); communication and use of service charges; administration charges; permission fees; use of covenants; and protection of client money.
“Standard industry cost codes, as have been developed for commercial service charges, should be developed to help consumers to more easily identify and compare items of expenditure, and to form a standard basis for accounts for managing agents.”
It also urged that the statutory regulator “takes over from the First-tier Tribunal the power to block a landlord’s chosen managing agent where the leaseholders have reasonably exercised a veto”.
How come this all ended up with RICS – and the largely irrelevant Property Ombudsman – coming up with something utterly pathetic?
In the absence of any government initiative, RICS set up a steering group under Labour peer Baroness Dianne Hayter: the Leasehold Knowledge Partnership declined to take part, a view shared by the national Leasehold Campaign and the Federation of Private Residents’ Associations.
In October 2020 Hayter, who has said that her role is unremunerated, publicly criticised LKP at a meeting of the Institute for Residential Property Managers for not taking part, wrongly stating that we were upset at not being invited onto her steering group.
Lord Best’s report was “on the back burner because of Covid”, so RICS and the Property Ombudsman decided to step in by providing a code during this “dormant period”.
Here are some reasons why we don’t think the trade bodies should mark their own homework by setting the agenda for a new code of practice.
First off, RICS has one or two problems of its own, with BDO accountants warning of “unidentified fraud, misappropriation of funds and misreporting of financial performance” at the standards-setting trade body:
From its grand headquarters on Parliament Square in London, the Royal Institution of Chartered Surveyors (RICS) looks out over the property industry. The RICS is the world authority on standards and qualifications in building surveying. It maintains the Red Book, the bible of commercial property valuations.
Here’s RICS disciplinary fiasco over Benjamin Mire (and 300 struck-off chartered surveyors who have had to be reinstated):
And here’s former Labour minister Sally Keeble walking out as the regulator of the Association of Residential Managing Agents, whose efforts at self-policing completely failed when members in the naughty corner threatened to sue it:
Sally Keeble also wrote an article for the LKP website explaining why self-regulation does not work:
And here’s ARHM feeble response to the OFT finding of a bid-rigging racket by Peverel’s subsidiary Cirrus:
ARHM STATEMENT INTO PEVEREL PRICE FIXING / COLLUSION FOLLOWING INVESTIGATION BY FORMER OFT. Starts The ARHM Audit and Regulation Committee has been working with Peverel to review the outcome of the OFT investigation into collusive tendering in relation to the supply and installation of certain access and alarm systems to retirement properties.
Dallas Banfield, a chartered surveyor and “judge” with the First-tier Tribunal, chaired the sessions to come up with the RICS code: “So many of the cases that come before the First-tier Tribunal have a lack of transparency at their heart. Anything that brings greater understanding of the respective rights and duties that exist between landlords and lessees must be welcomed.”