Are things looking up for property management?

NOTB:  First of all can you tell us what the background is to Preside and a little bit about your business and your goals?

CH: I started my involvement in property management more than 20 years ago,  when I was still single and decided to invest in property as distinct from investing in a pension scheme. Over the years that developed into being more involved with commercial property and lastly with medical property. Often in the medical sector there are residential properties involved at the top or bottom of buildings.  This led to involvement in the residential side of work.

Management Accountants Limited was formed in 1983 to work particularly in forensic areas.  We have found in the last seven or eight years work has developed in the residential market -particularly on forensic and accounting enquiries to do with service charge accounting. I particularly noted over that period that there has been a lack of key skills primarily the accounting sector of property management.  Often estate agents or surveyors are involved with providing the service and the accounting function is left to book keepers rather than qualified accountants.

The opportunity arose because of the recession to examine whether we should undertake a new venture and bring in particularly qualified individuals who were more knowledgeable on the running of block management.  Having investigated that idea we came to the view that we should have a top team at the outset.  Rather than build upwards we would build downwards from the top team.

We then set about looking for the right people.  I am delighted to say we have ended up with a full team which includes Patrick Flynn, dealing with new business, managing on site with our clients as the face of the property management, and to be involved with RMC management. We then have David Goldberg, whose operational skills are absolutely essential to any business.  It is that background function which is absolutely important to make sure that everyone else can do their job efficiently. My job is to bring the accounting and legal aspects in to play. We also have Bertie Gladwell, who has been more than 30 years in the insurance business and Rudy Fatell who is a chartered surveyor.  That provides us with a complete team to look after property management in the way that we believe it should happen.

NOTB: Patrick, Could you tell us a little bit about your background please?

PF: Anybody who is anybody, or any company who is any company, I have probably, pretty well worked for them. I have been in the game now for nearly 30 years and the last 7 years I was at Douglas & Gordon (having left Knight Frank who decided to exit the market). My job at Douglas & Gordon was primarily new business, running the portfolio and getting property managers to act in the manner and using the philosophy I want them to act by.

NOTB: David, the same question. Do you want to tell us a little bit about your background please?

DG: I originally got a degree in estate management.   Like many others in the early 90’s, I didn’t actually go into surveying - which was going to be my chosen field. I fell into I.T. where I stayed for the best part of 7 years. The I.T bubble burst and I thought, “ right its time to go back to my property roots” and I went back into property management.  I ended up at Crabtree Property Management where I originally joined as a property manager. I moved my way up the company to become a Director a number of years ago and helped grow the company to what it is now. I looked after the property management department and was a key player in terms of setting up the systems and making sure that operationally the company grew. Obviously this opportunity came around to join Preside and I felt it was the right time to do something for myself.

NOTB: Can you tell us where the name ‘Preside’ came from?

PF: This was one of the most important parts of the whole process. We spent an awful long time kicking around names. We had a working name to operate by, so if we were answering the phone we had a name to use but we felt that name didn’t really sum up what we were about, which is overseeing, steering, guiding our buildings and our clients and being the general co-ordination.   When we saw the name Preside suddenly that shone out at us. It had the word ‘reside’ in it which was residential. We looked it up in the dictionary and it said, “ to exercise guidance, direction and control”. Somehow that seemed to reflect everything we felt about what property managers are about and it was a punchy sort of name. We also noted there is no other company in the U.K with that name.  So, we felt this is truly original and would actually reflect our branding, our mark, everything about how we will look after the buildings.  We thought that was symptomatic of the way we operate and the way we will operate.

NOTB:  How do you intend on developing the Preside business?

DG: Well we have a very clear medium to long term plan and we have got a robust business model on which to grow the company. Obviously we want to target buildings and developments which would benefit from our service and who are willing to work with us to improve their residences. Ultimately growth is planned to be organic and through referral and by reputation. Building from the top down and with a blank sheet we certainly have gone about to set up our systems and procedures using innovation and technology wherever possible. This includes our bespoke management software.  After spending a lot of time trawling through all the third party suppliers, we quickly realised that actually there wasn’t anyone out there who provided everything we wanted. We had a very clear vision on what software should do for us, but more importantly what it should do for our clients.  We felt there was a gap in the market. So we have actually had software specifically built for us, so that we can ensure our clients are managed to the very highest possible standard.

We believe the founding Directors have a very solid reputation in the market place and this is why we have chose to launch at RESI 09, the industry’s most prestigious event in September. This is an event where we are expecting around 800 of the industry leaders and we felt this is the most fitting environment really to launch the business. Of course, there is no substitute for getting in front of prospective clients to demonstrate our enthusiasm and the quality of service that we will be supplying.  So, we are looking forward to the tendering process and putting our skills to test.

NOTB: What gives Preside the competitive advantage?

PF: We are a small company but we are also very flexible. We have the speed and ability to access and deal with issues. Of course, we are centrally located and that is a key thing here. Part of our business model is to ensure that property managers aren’t overloaded and actually have time to deal with issues. Given our extensive experience in the market place we know what works and what doesn’t. So everything we have done has been to set about ensuring those gaps are filled and primarily it’s our stringent financial accounting functions and solid communication that will give us the clear competitive advantage. For example, we provide full trial balances to auditors which means our clients’ accounting fees are substantially reduced. We felt it very important to offer specialist advice and not just refer people to third parties. That’s why we employ a RICS (Royal Institution of Chartered Surveyors) surveyor and an insurance expert to deal with those areas.

NOTB:  Can you explain a little more about why the Preside service is good for leaseholders?

PF: The fundamental thing is that we actually like what we do. I have been in the game for a long time, as David has been.  We are continuing in this business because there is no point doing  a job just for the money, it is actually because you like doing it. So, we hope that enthusiasm does filter through to the lessees and that we will be enthusiastic and enjoy looking after their building. We have got a mission statement and one of the fundamental parts of it is we want to be a personal, caring and knowledgeable staff. Therefore, you’re going to get that from top down, from the directors and that will filter down to the staff and that will then reflect itself in the building and people will enjoy living in their building because they will have enthusiastic staff looking after them. We are banking with Coutts because the private banking model of customer care and customer service is key to everything. We want to set ourselves up offering those same sort of attributes and facilities. I think that will reflect and clients will enjoy that.

NOTB: Can you tell us how Preside improves relations with leaseholders?

CH: One of the comments which will often be heard from Directors or lessees is “we rarely or never see our property manager or anyone connected with the management of the property”. It’s probably not correct to say because surveyors must attend at times and property managers must show their face to actually check on the state of things, but the reality is there is very little in communication going on. We actually hold surgeries.  Everyone from the lessees to the Directors can attend.   These are held with all of our staff, which includes the accounts department.  So the normal face that’s not seen, is seen and people can ask direct questions at the table. We also take charge of insurance claims with arrangements with insurers that allow us to deal with matters immediately without having to first report to insurers.  It really does save a lot of cost and very often results in an insurance claim not being necessary.  This actually has the ultimate effect of reducing insurance premiums, of course.

NOTB:  In general what aspects of the industry would you like to see improved?

DG: Well, I think one of the important things is actually the qualification of property managers. It is maybe a bit controversial, but I’m not sure the IRPM exam is enough, even though I have qualified through that.  However, a property manager might be dealing with a client in much the same way as a solicitor or an accountant or a surveyor would be and yet as a property manager you are not required to have any formal qualification to give that kind of legal accounting or construction planning etc advice.  Let’s not forget we are dealing with people who have an asset worth many hundreds of thousands, sometimes in the millions of pounds bracket. I think that maybe something more formalised would be appropriate. That is one of the reasons why we employ a qualified RICS surveyor and an accountant within our business. In order to address this, I suppose the industry must look to recruit more qualified individuals.  This will have a knock on effect to the fee level which lessees will have to pay.  So, we appreciate it is a very difficult one to balance. We often hear that people say they wouldn’t want to do our job.  Well, I think we know why – because, of course, there is such diversity in what we need to do.

I think another area I would certainly like to see improved is whether we should be regulated. I don’t actually believe we should be regulated in its entirety but I do feel quite strongly that the financial aspects of our business should be controlled with some form of regulation. At the end of the day we could be dealing with hundreds of thousands, millions of pounds worth of clients’ money. In light of the recent press coverage of fraud cases I think it is very important that when dealing with those sums of money those should be controlled more closely, possibly through the FSA (Financial Services Authority). 

NOTB: Patrick, is there a particular type of building which you are aiming for with Preside?

PF: It doesn’t matter whether they are mansion blocks, wealthy, suburbs, or middle income. The buildings we want to go for are the buildings who are going to work with us to create a better environment for their residents. If they are only interested in cost cutting - not just our fees but cutting wherever for the sake of it as opposed to looking for good value for their money, then we would say we are not sure that we can help you. We want buildings that are willing to work with us to create a better building for them.

NOTB:  Is it just central London buildings or are you looking for buildings outside of London?

DG: No, we are not specifically looking at mansion blocks or anything. We don’t really have that sort of requirement as such.  Clearly, in order to offer our service they need to be within easy access.  We are centrally located so we can access most of London from our offices here and we certainly don’t have any specific type of block we want to work for. We also want to target the developer market.   I think that’s a very key market to be looking into. We know other companies obviously do work with developers but we think that given the level of experience we have within the company we feel that is a very strong market for us.

NOTB: With the current developer market being affected quite badly by the credit crunch and recession, how does Preside fit in?

DG: At the very front. That  is a very simple answer. Developers may not be selling their properties as quickly.  If you look to the market at the moment, what they are doing is hanging on to their properties and offering them on a rental basis.  That  is actually where they are making their money at the moment. Therefore, I think the need for a good managing agent is vital and as I say, you have to lead from the front on that.

NOTB: Moving on from there, with your background of the property management industry have you seen it being affected by the economic climate?

CH: Well the effect of the recession is most obvious on people who are struggling to pay their service charges, obviously with the valuation of their properties going down as well. We are finding it rather different in the centre of town which is where we are based and particularly where there is a heavy volume of work. If you go out to the local restaurants you would not believe there is a recession or anything like that around in W1.   Going beyond the most obvious effects of recession there are two aspects perhaps I can point out. One is, it is the time of opportunity as far as I was concerned to find some people who can join us when the industry generally was either shedding jobs or holding tight on bonuses and pay increases.

On the other side of things, if we look at lessees view, it is a difficult time.  The accounting side of the business is important in property management.  If it is dysfunctional and without sufficient control, you really need to have time to spend with individual lessees to re-arrange arrears problems so that you don’t end up automatically going to Court every five minutes.  That is something we particularly take care of, in going and meeting with lessees. Well run blocks that have reserve funds in place have used the advantage of this year with the reduced VAT rating to actually progress works early which created a 2.5% saving on the spend.

NOTB:  What factors are important for a leaseholder when choosing a property management company, Patrick?

PF: Fundamentally it is communication. You have to look at the company, that it is well run and gives confidence that it is not going to disappear or make a mess within its own financial aspects or functions. However, I think the main thing is, is the managing agent going to communicate with them? That is often the biggest complaint that lessees have: that emails, letters, phone calls are not being returned, “we don’t know what’s going on”, “we don’t know who our property manager is”, “nobody communicates with us”. We set great store by communication and with all of the various ways of doing it we are making sure that that happens. I think when prospective clients meet the directors the enthusiasm will show and the experience that the directors will demonstrate will filter down through the company and the directors modus operandi must reflect everywhere within how the company operates.  I think that gives leaseholders and potential clients confidence that they will get a good and efficient property management service.

NOTB:  Are there any particular unique aspects to your business, David?

DG: I think the obvious one is we are starting up in a recession. I don’t think many people are doing that. In fact I think a lot of people queried this when we told them about it and I don’t think they understood our market. As we have mentioned before, in a recession only those providing very high standards of service will prosper.  So, actually we felt that this was a great time to be starting up a company whose primary focus is service. Moving aside from that sort of thing, like everyone we pride ourselves in offering great customer service and we communicate well. We have certainly set the company up with a focus on green management.  I know it’s a bit of a buzzword but we want to make sure that it’s something that is built in to all of our systems.  So, for example, we offer the facility for a lessee to receive their demands electronically, they will be able to access their statements and make payments online, hence reducing the amounts of paper that we produce. We also will have online services for Directors, so that Directors will have access to certain information online which obviously only they can see. Lessees and residents will have access to other areas of our website and I don’t think any other company is providing that fully across the board and that was one of the reasons we went for bespoke software because we certainly know we have some people who provide that information for Directors but not lessees and vice-versa.  So I think we are unique in that.

NOTB: Finally, what sort of things do you do to unwind when you are away from the world of property management?

PF: Well, with three sons I’m usually more wound up by the time I go to bed. However, they all have their hobbies which I actually involve myself with - be it music or sports - the children are the key for everything.

CH: We live in the centre of London so between cinemas, theatres, restaurants, fortunately to unwind is really not a problem for where we live.

DG: I suppose for myself I also have a couple of kids so when I am not dealing with them and obviously trying to spend some time with my wife I am probably to be found on the golf course or playing guitar, which is one of my favourite hobbies. I have recently joined a band so we might have a property management get together at some point.

CH: Very quickly and hastily I should add I have a wife and we enjoy ourselves.

PF:  And me!

For further information see:
www.preside.co.uk
Telephone: 020 7224 0011

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