The annual conference of the main leasehold property managers trade body ARMA (Association of Residential Managing Agents) took place on 5th November. It was maybe appropriate that this year’s meeting took place at the prestigious Methodist Central Hall in Westminster with some agents soon to be excommunicated as sinners and others still in need of redemption.
This was also ARMA’s largest ever conference and the last before those members who cannot, or have chosen not to, meet the now obligatory ARMA-Q accreditation standard are required to leave the organisation. While ARMA still has a long way to go before all agents comply with the spirit as well as the letter of the ARMA-Q, it is a big step forward from their previous less than rigorous bye-laws. Leaseholders can hopefully also have confidence that former Labour Housing Minister Keith Hill is the ARMA chief regulator. (LKP Note: We are aware Keith Hill is overseeing a number of important cases at the moment and we will report on these when his decisions are announced.)
Of the various speakers the chief economist for RICS, Simon Rubinsohn, predicted buoyant property prices over at least the next few years. The one potential problem he highlighted was the private rental sector following recent changes made by the Chancellor regarding mortgage interest. Simon did not talk specifically about leasehold property values so his comments do not reflect the whole market. (LKP Note: As readers will know there is extreme variation in the value of leasehold properties. Those with short leases or in some parts of the retirement sector continue to heavily underperform the rest of the market.)
Karl Arden from the ARMA technical team ran through a number of the updates to their technical guides. These guides are regarded as one of the most useful services provided by ARMA for its members enabling agents to keep up with an ever changing set of rules and regulations. (LKP Note: As well as guides for managing agents a number of very useful guides for leaseholders are produced. The guides are free to access and can be found HERE.)
From the social sector Steve Michaux, Chair of the National Leaseholder Group and director of leasehold services for A2 Dominion, along with Katie Bond, director of Notting Hill Housing, talked through a number of issues in their sector and its growth over the years. They also talked about working with private sector managing agents. They explained that in London the social sector providers now represent almost a third of new build, a growing proportion of which is sold directly into the private sector.
Steve Michaux explained that the current right to buy proposals may add as many as 500,000 leaseholds to the sector over the coming years. (LKP Note: The government still appears not to have fully understood the implications of the leasehold sector magically growing from 2-2.5 million to 4.1 million last year after we helped demonstrate that the previous figures were fundamentally flawed. The addition of a further 500,000 homes places an even bigger strain on the systems which are meant to support leasehold tenure.)
After lunch the audience listened to specialist leasehold barrister Justin Bates and solicitor Cassandra Zanelli, who ran through a series of cases which might cause managing agents concern. For both RMCs and RTMs there are potentially some interesting VAT issues at the moment.
At the end of the talk Justin explained a little more about the recent court of appeal decision (which can be read HERE) which overturned the lower tribunal’s decision to allow a single RTM to run multiple blocks. In each of the three cases considered in the appeal the court found that the law required a single RTM to run a single block. Mr Bates of course agreed with the court of appeal decision which was perhaps inevitable, having been part of the landlord’s legal team led by Philip Rainey QC. (LKP Note: Our view is that the court of appeal decision is deeply flawed for a number of practical rather than legal reasons and hopefully the decision will force government to consider amending the law to make RTM work more effectively.)
The question asked by a number of managing agents was ‘what should existing multi block RTMs do now’? The answer, Justin Bates suggested, is that nobody is sure at the moment. He explained that he had already advised both landlords and RTMs on the matter. His general view for existing multi block RTMs seemed to be that it probably depended on whether the RTM had been awarded following a determination by the tribunal or had just been agreed directly with the landlord.
In the case of a Tribunal decided existing multi block RTM Justin Bates felt they would be in a stronger position regarding their continued existence in their current form. However for those that had been created voluntarily with the landlord he suggested that the leaseholders might be in a slightly more difficult position if their status were now to be challenged by the landlord. He suggested such sites might now want to agree with the landlord to allow the creation of a new RTM for each block, and for the landlord to continue to agree not to dispute the right of an RTM to run the site. (LKP Note: We are happy for Justin or other specialist counsel or solicitors to comment further on the legal points of this issue. Others who speculate on the law or tout for business may have their comments redacted.)
The tone of the conference has certainly changed over recent years. The good news is that each year seems to see rather fewer criticisms directed at leaseholders. Each year those who believe in customer service seem to have a slightly stronger voice and each year there seems to be a little more acceptance that delivering good service might actually be a better way to grow a business. The bad news is that ARMA still has a rump of managing agents where bad practice is all too common. It will take a year or two to know whether the ARMA audit process is going to expose these agents.
Despite the sector asking to be formally regulated for years the government still insists that managing agents should somehow police themselves. ARMA-Q is that policeman. However, what ARMA cannot do is to force agents to either join ARMA or regulate those agents who choose not to belong to any regulatory group or scheme. Soon ARMA will also no longer regulate those agents who are choosing leave rather than meet the ARMA-Q standard. At the moment Countrywide is high on the list of agents who have dropped to “Associate” status and so are due to be leaving at the end of December. (LKP Note: In a meeting with Sir Peter Bottomley MP and LKP earlier this year Countrywide made it clear that they were still thinking about their continued ARMA membership although no clear explanation was given as to why they might now be choosing not to meet the ARMA-Q standard.)
One final and important development this year is that social hosing groups can now apply to become ARMA members. This seems a positive move and one which LKP supports. Too many social housing groups have too many problems with their leasehold tenants.