Regulation of Managing Agents

There is much confusion surrounding the role of a managing agent and whether to regulate them or not.

The local and national press have highlighted various Leasehold Valuation Tribunal (LVT) cases where managing agents have been found to be taken excessive insurance commissions or management fees. Unfortunately those with a limited knowledge of managing agents can tar other managing agents with the same brush.

Most of the cases where the LVT has ruled against managing agents are where the freeholder appoints the managing agents and the residents of the development have no say in how their development is run. I would therefore agree completely that when a freeholder appoints a managing agent that managing agent should be regulated to protect the residents else they are free to do as they please at the resident’s expense.

Laws have now been changed and residents can enforce the Right To Manage (RTM) and take complete responsibility away from the freeholder and there are many managing agents and legal firms who will gladly help you with this – for a fee or long management contract of course!

My advice for any resident not happy with their freeholder appointed managing agent would be to contact the freeholder in the first instance as they may be happy for the residents to select their own managing agent.

The developments I currently manage mostly all have a freeholder but there was also a Resident Management Company (RMC) set up, this is a limited company whose sole responsibility is  the smooth running of the development. Anyone buying a property on the development through purchase also became a member/shareholder of this RMC.

A board of directors is elected from the residents and they are charged to oversee the running of the development and to ensure the RMC complies with all relevant regulations. Usually the RMC will appoint a managing agent to deal with the running of the development and they will be responsible to the RMC and its directors. So in this instance the RMC and its directors are regulating the managing agent.

You could question whether the directors are competent enough to ensure that the managing agent is running the development properly, but in my experience I have found that although their role is voluntary directors of RMCs take the role very seriously and more than competent enough to ask questions of their managing agent with regards to costs and regulations.