Independence & Ethics in Residential Property Management - July 2011
Much has been written or said in the press recently about abuse within the residential property management services industry.
It is a great sadness to those who compete fairly and openly in this market that the overall reputation of those in the sector will be negatively effected by it. As much as I believe that the overwhelming majority of managing agents conduct their business ethically, there are an alarming number of instances of less than honourable practice within the property management sector.
One of the many but central points affecting this is a general misunderstanding of, or lack of clarity between, the roles and responsibilities of the owners (or landlords) of freehold property and that of their appointed managing agents.
For centuries British law has sought to protect the rights of tenants against those unscrupulous landlords who have found property ownership, and the law governing it, complex enough to disguise the “sharp practice” that is more visible in other sectors.
The laws and codes of practice that have evolved over time, seeking to ensure a more transparent and understandable service from Property Managers and Landlords would, in my view, do well to focus on the need to separate out the entitlement of property ownership from the responsibility of property management. More specifically, for property managers to avoid the conflict of interest in the selection of contractors or service providers is of critical importance. The obligation, for example, for a managing agent to disclose that it is under the same ownership as the landlord/freeholder would enhance transparency significantly. It would also go a long way to reducing the actual or perceived power to abuse that accrues to landlords through the terms of the lease which, all too often, the lessees are unaware of.
“Right to Manage” law does facilitate the transfer of management responsibilities to agents of the lessees choosing. Sadly the need and ability to use this right is not always apparent and is sometimes extremely difficult. In the first instance there is a lack of visibility of conflicts of interest which means that lessees are not always aware of the potential abuse. Secondly, inertia and the high number of units in an estate can often make the Right to Manage process difficult to achieve. Amongst other requirements, 50% of the qualifying tenants need to vote if favour of the process and when there are many of them, and many absentee landlords, this can be difficult to achieve.
Property managers committed to providing an open and transparent service must embrace lessees’ right to use the Right to Manage mechanism and assist where and when they consider it necessary.
For more information please contact:
Robert Plumb, CEO
HML Holdings plc
020 8439 8529
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