As ARMA Q proceeds through consultation it will be interesting to see who really reads it and makes meaningful comments on its proposals. So far I have heard from no-one outside of other managing agents who broadly support the proposals but have concerns centred around some of the detail.
As it stands, ARMA Q will require every managing agent to detail annually, to its client and all leaseholders, every bit of income derived from its activities on their behalf, including any associated companies. This will, of course, include any insurance commissions. There are well established precedents for what is reasonable for the insurance work that managing agents undertake for their clients, but what of other areas from which many derive an income?
A good proportion of agents provide other services such as cleaning and concierge, health and safety and various maintenance services, not to mention lettings and estate agency services. Will they be required to reveal margins on these services by block? Surely that would make it impossible for them to compete fairly with other external service providers who will not be required to reveal their margin?
I also include in this any national procurement agreements that results in a payment to the agent - even if this is dressed up as a consultancy fee. How is it intended that this is revealed on a block by block basis? How does the agent prove that it represents value for money for each and every block? What if the agreement has a confidentiality clause?
An example would be the sort of agreement that agents have for the purchase of utilities. Because they can buy these for a huge number of blocks they are able to negotiate procurement agreements that give them a fee and benefit their customers because of their buying power.
Clearly for customers who have a poor record with insurance claims or a high level of engineering maintenance issues, national procurement models can provide huge benefits. If agents stop these agreements then there is every possibility that, not only will the contract costs increase universally, but that the agents' management fee will need to go up too.
Bulk purchase, procurement activities and regional/national agreements have a significant benefit to customers, providing additional value and protection of a large syndicate/portfolio. They are universally used throughout the FM industry to achieve best value and they cost time and money to set up and administer. For example: Lift contracts are often set up by the developer as part of the procurement of lift installation. As a consequence the leaseholders may inherit an expensive long term agreement - which effectively compensates for driving down the installation cost. Managing agents with portfolios of lifts to maintain can use their buying power to renegotiate these contracts - sometimes halving the costs. This process requires hard negotiation and agents should not be ashamed of taking a fee for delivering it.
Transparency in the regulation of managing agents will require that all of this activity is undertaken openly and that is a good thing, but not if it leads to agents being unable to take a reward for their efforts. Many agents are uniquely qualified and they work hard to achieve accreditations and compliance standards. They may employ specialist risk assessors, and engineering and asset management specialists. They may have a range of highly specialised skills that add value and are generally only available elsewhere at a cost.
Independent managing agents provide an essential service. Make sure that all income streams are clear in your contractual arrangements with them. That way, and that way only, you will receive best value. There is a wide choice of service levels available at a wide range of prices - chose the one that suits your development and look closely at what would happen in a genuine emergency.
Most importantly - make sure your agent is going through the ARMA Q accreditation process, it will be the only independent accreditation and that might count for a lot when there is a major issue to be resolved.
As it stands, ARMA Q will require every managing agent to detail annually, to its client and all leaseholders, every bit of income derived from its activities on their behalf, including any associated companies. This will, of course, include any insurance commissions. There are well established precedents for what is reasonable for the insurance work that managing agents undertake for their clients, but what of other areas from which many derive an income?
I also include in this any national procurement agreements that results in a payment to the agent - even if this is dressed up as a consultancy fee. How is it intended that this is revealed on a block by block basis? How does the agent prove that it represents value for money for each and every block? What if the agreement has a confidentiality clause?
An example would be the sort of agreement that agents have for the purchase of utilities. Because they can buy these for a huge number of blocks they are able to negotiate procurement agreements that give them a fee and benefit their customers because of their buying power.
Clearly for customers who have a poor record with insurance claims or a high level of engineering maintenance issues, national procurement models can provide huge benefits. If agents stop these agreements then there is every possibility that, not only will the contract costs increase universally, but that the agents' management fee will need to go up too.
Bulk purchase, procurement activities and regional/national agreements have a significant benefit to customers, providing additional value and protection of a large syndicate/portfolio. They are universally used throughout the FM industry to achieve best value and they cost time and money to set up and administer. For example: Lift contracts are often set up by the developer as part of the procurement of lift installation. As a consequence the leaseholders may inherit an expensive long term agreement - which effectively compensates for driving down the installation cost. Managing agents with portfolios of lifts to maintain can use their buying power to renegotiate these contracts - sometimes halving the costs. This process requires hard negotiation and agents should not be ashamed of taking a fee for delivering it.
Transparency in the regulation of managing agents will require that all of this activity is undertaken openly and that is a good thing, but not if it leads to agents being unable to take a reward for their efforts. Many agents are uniquely qualified and they work hard to achieve accreditations and compliance standards. They may employ specialist risk assessors, and engineering and asset management specialists. They may have a range of highly specialised skills that add value and are generally only available elsewhere at a cost.
Independent managing agents provide an essential service. Make sure that all income streams are clear in your contractual arrangements with them. That way, and that way only, you will receive best value. There is a wide choice of service levels available at a wide range of prices - chose the one that suits your development and look closely at what would happen in a genuine emergency.
Most importantly - make sure your agent is going through the ARMA Q accreditation process, it will be the only independent accreditation and that might count for a lot when there is a major issue to be resolved.
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