An increase in the number of new build housing estates to meet the country’s housing needs is inadvertently leading to a growth in unregulated management agents.
The buyers of leasehold and freehold properties on new and existing developments are increasingly being required to pay management fees to agents to cover the cost of maintaining shared public spaces.
With an estimated £3.5 billion of service charges collected each year, this is a burgeoning industry that has a massive impact on homeowners.
While the sector is partly self-regulated – through professional bodies such as the Association of Residential Managing Agents, ARLA Propertymark (formally Association of Residential Letting Agents) and the National Approved Letting Scheme, which have a code of conduct – other property agents operate outside of any system and can provide a poor deal for consumers.
Unsurprisingly there have been reports of rogue agents over-charging for services and industry experts claim that British households are being overcharged by as much as £1.4 billion every year.
Unsuspecting householders assume they’re paying their service charges to skilled, experienced professionals, but sadly this is not always the case.
The cold reality is that in extreme cases leaseholders may risk losing their home if they fall behind on service charge payments, while freeholders on new build estates increasingly have to pay service charges for the upkeep of common areas but have no say over who provides those services and at what cost.
The RT Hon Sajid Javid MP recognised the need for a fairer property management system when he published a ‘call for evidence’ last year seeking views on whether regulatory overhaul of the sector is needed, measures to protect consumers, and ways to place more power into the hands of consumers.
Many say that an entirely independent regulator is needed to oversee property management and, while there is currently no statutory regulation of managing agents in England, the Government has said that regulation will be introduced.
If you are considering buying leasehold or a freehold property it is essential that you seek legal advice on potential service charges. If you are selling, you may also incur additional fees with the management company to obtain the information your buyers will need about the service charges, and this is in addition to the payments you ordinarily make.