Proper regulation is needed, while far-reaching leasehold reform must accompany changes to the building safety regime
Residential property management is broken and the regulation of managing agents long overdue. Not just from a ﬁnancial point of view but also operationally, for running safe and compliant buildings. Leaseholders are typically disenfranchised, sometimes dismayed and often confused, while there are repeated reports of overcharging, poor maintenance and breaches of health and safety legislation.
Most property managers genuinely want to do a good job and are admirably trying to address the failures of customer service that are all too common. But the industry is fragmented, poorly regulated and almost exclusively populated by owner-managed businesses, which control about £5bn of service charges and sinking funds with no requirement for protection of clients’ money.
The Association of Residential Managing Agents (ARMA), a voluntary professional rather than regulatory body, states that only a third of all managing agents in England and Wales are members and abide by its standards and code. ARMA’s membership base manages 1.25m of an estimated 4.3m leaseholds in England. This means that millions of homes are under some form of ‘self-management’ by people with no professional indemnity insurance. These blocks are unlikely to have suﬃcient insurance to cover theft or misconduct, and consequently consumers are vulnerable, particularly regarding health and safety and ﬁre regulations.
Having just moved into their new home, leaseholders tend to overlook the mundane requirements of maintenance schedules to establish sinking funds for longer-term expenditure. Without these, however, when the roof caves in or the 40-storey high-speed lift breaks in 20 years’ time, it’s the people owning the apartments at that speciﬁc point who will be entirely liable for the total costs of the repair or replacement. This seems pretty unfair if you only moved in the week before.