This month, in a new series of articles ‘from the frontline’, frustrated leaseholder Antonia Adams discusses some of her experiences with ineffective managing agents and considers what needs to be done to differentiate between the good, the bad and the ugly.

It might be surprising to many people that although managing agents across England and Wales control £1.5 billion pounds of leaseholders service charge monies, they do not require licensing or any formal qualifications. So, what do leaseholders do when their freeholder and managing agent are one and the same? Or the freeholder opens another company, only to become an absent landlord and the remaining members of the company refuse to acknowledge any of their obligations? I have experienced both of these scenarios and what I discovered exposed an area that to my knowledge has not yet come under any particular scrutiny and that is the problem of managing agents that are permanently under the radar because of a system of voluntary registration only.

This problem was compounded by the fact that Companies House is simply a registration bureau. So, when our freeholder dissolved his first managing company and opened a second with a family member, there was no checking mechanism in place to raise alarm bells. My question is why and how is this allowed to continue?
When my partner purchased the flat in 1989 there was no indication of any problems although shortly after moving in he discovered that service charge payments were being withheld because the only jobs being carried out were botch up jobs and then no jobs at all.

It didn’t change when the second company was created, in fact the situation worsened because the new owner flatly refused to acknowledge any of their responsibilities. Add to this the fact that we don’t make the criteria for collective enfranchisement, we couldn’t set up a residents association because not enough owners actually lived on the block and up until recently, we didn’t match the criteria for RTM, I decided to carry out some background checking of my own. I discovered that the family were responsible for opening and closing a large number of other businesses over a number of years, 15 of which were dissolved. Additionally they had left a large number of (mainly) unsatisfied County Court Judgements in their wake.

Control of a property

The definition of a managing agent according to North West Universities Association is ‘a person or firm that is appointed by the freeholder or the legal entity that has control of a property, to manage that property on their behalf’.

They go on to say that ‘with regard to leasehold property (if the lease allows for the appointment of a manager) the managing agent contracts with the freeholder or controlling entity to manage the property in accordance with the terms of the lease and statutory requirements’.

Most professional managing agents do match the legal definition in many cases, and whether ARMA registered or not are usually extremely visible and accessible. It is these very types of agent that perhaps would not see the need for licensing even if it showed them to be good agents.

However, without licensing, an agent can be as invisible as he or she likes. Just imagine the easing of our situation if our freeholder had been aware that on creation of a new company, the details would have been linked automatically to a central licensing database that functioned such as ARMA for instance, where members are bound by a professional code. Had this been the case our freeholder may not have slipped through the net so readily and might not even have purchased the freehold in the first place.

Use wisely

I appreciate that there is a lot of assistance and information available for leaseholders to assimilate and use wisely without the help of a solicitor (which, incidentally, we also tried and who also said it would cost too much to take our agents to court), but sometimes this is not enough.

In an email I received from The Housing Ombudsman in 2006 they stated that they can deal with complaints if they are about the landlord and tenant relationship, which they then went on to broadly define to include tenant, leaseholders, licensees and others who receive services from landlords who belong to their schemes. They then stated that our relationship with our agent was not one that fell into any of the above categories.

And what is our former agent doing now? By not sending the required documentation to Companies House, she was struck off the Register earlier this year with a loss to the company of £23,000. Although our freeholder is now deceased there is nothing in place to prevent her or anyone else from purchasing another freehold and starting all over again.

What the experts have to say…

“These problems are present in any business, but it is a concern in ours and that is why we are continually calling for the government to regulate our sector so that new entrants can be stopped unless they are competent and capable people. However recent ARMA research found that the government has no plans to carry out these much needed changes in the foreseeable future.”

David Hewett, chief executive, ARMA

“The only effective answer is regulation, with cowboys being disbarred. Yes, there’s plenty of law. But resident management companies don’t have extensive resources to pursue rogues through the courts, after which the offenders may simply crop up elsewhere. Managing agents already handle £1.5 billion in service charges yearly and thousands more flats are being built. It’s time the government stopped saying manãna to regulation.”

Jane Barry, property correspondent for The Evening Standard

“For all the legislation that the government seeks to introduce it is normally only more red tape to the good guys. Without a truly effective regulation of managing agents how can the public know wheat from chaff? Clear guidance on good practice and benchmarking are a means to demonstrate ability.”

Roger Southam, chairman, Chainbow

If you have experienced a similar problem within your block of flats then please write to us at News on the Block, One Great Cumberland Place, London W1H 7AL, or email Jamie Reid at jamie@newsontheblock.com. We are always interested in hearing what you have to say, good or bad...