Compliance and Credit Control more important than ever!

In property management compliance and credit control are In property management compliance and credit control are more important than ever – choose your agent well!

In tougher times it is to be expected that new businesses will spring up as individuals seek to create there own and as firms diversify to protect themselves. Residential block management is no different and we have seen a positive glut of new players in the last two years. This is generally a good thing I suppose, but residential property management remains a cottage industry and standards continue to vary hugely.

What concerns me most is the message that many new managing agents give on their often highly professional websites. They usually go like this:

We are open and transparent

We are cost effective and will save you lots of money

We will inform and discuss with you all changes

We will provide on-line services

We are local people

All other agents are cowboys (or veiled hints at this)

Doubtless these are all honourable and well meant messages. But they are aimed at leasehold customers and play on the understandable fear that they are being ripped off by unscrupulous invisible landlords and their agent henchmen.

What though of ‘experience’, ‘expertise’, ‘compliance’, ‘probity’ and ‘who are we’? Usually there is very little on these topics because they set up last week, have little real experience and no track record.  If you are looking for a new agent, choices are myriad. So here is my guide to what you really need to ask, whether you are a developer, a landlord or a residents’ management company:

• What is your experience, qualification and track record?
• Who are your directors and key staff and what is their experience and how do I contact them? Oh, and why aren’t your names on your website?
• What are your key compliance activities – how do you ensure the health and safety of my customers and absolute compliance with statute and regulation? Show me some key reports in this area, not the actual fire report but how you track that such reports are being done and then acted upon?
• What systems and technology do you use? Have you got a proprietary management system? Your not using a spreadsheet for all this are you!?
• Demonstrate to me how you control service charge costs – what are your budgeting and periodic reporting capabilities?
• Are you members of ARMA and thus following RICS guidance and members of an Ombudsman?
• Can I see your complaints procedure, your insurances and last set of accounts?
• Tell me about your credit control activities. What are your procedures in this respect? How effective are they?
• Tell me how you will add value to our asset?
• Are you FSA registered in some way (if not then you can’t deal with any insurance matters - including claims handling)?
• Show me around some buildings you manage please.

Three things remain absolutely essential in residential property management: First is that health and safety compliance requirements cannot be ignored - and yes, I still take on large established managements where no fire risk or general risk assessments or other activities have been undertaken, where emergency lights and AOVs have not been checked or fire alarms serviced, where dry risers, lightning strips and man-safes are untested. Where water tests are not completed, lift reports not acted upon etc. etc. Terrifying isn’t it?

Secondly controlling arrears of service charges is key to running buildings successfully. If you don’t do it effectively then there is an inevitable spiral downwards that is unfair on those who pay on time and ultimately impacts asset values. Make sure your agent has a clear and sophisticated policy for dealing with late payers as a priority.

Finally this is a service sector industry – if it doesn’t act like a customer service driven company then it probably isn’t for you.

Sadly, until something goes horribly wrong for an agent who has not delivered a fully compliant service, the industry will continue to be price driven. You get what you pay for though. Watch this space as some of the new entrants find it very much tougher than expected – I know some already are.  You can’t do all this for a fee of £100 per unit – I promise.

This remains a complex business that requires real experience and expertise - especially in an unanticipated crisis.  Make sure you pick a winner.