The Government has announced the Competition and Markets Authority (CMA) have released their findings and recommendations surrounding the UK property market, following a recent residential property management services market study.
This research gathered input from a range of industry bodies from the sector, which is estimated to bring in between £2.5 and £3.5 billion annually through service charges. Contributors included consumer groups, leaseholders, property industry experts, and government officials.
One of the key recommendations that conveyancers are advised to note is the wider adoption of Leasehold Properties Enquiries form, which has been developed by the industry.
Overall, the conclusion from the CMA study was that the market works effectively for the majority of leaseholders across the board, but significant problems are still coming to the forefront – the most significant being issues with communication between leaseholders and property management.
Leaseholders came forward to say they regard themselves as having minimal control when a property manager is appointed. Excessive maintenance charges are unexpectedly surfacing, which aren’t being combined with a high quality standard of service provision. This, along with a lack of clarity over why certain work is necessary, is proving difficult for leaseholders to manage. Poor communication between themselves and the property managers is said to cause hardship when overcoming complications.
Bethany De Montjoie Rudolf, Director of Delivery at The Conveyancing Association, commented: “Whilst the report shows some improvements and some common sense suggestions in the management of leasehold property, it does not address the issues faced at the point of the conveyancing sale.
“The majority of the issues faced by seller’s, buyers and their conveyancers, are due to the fact that the worst landlords and management companies act for themselves so the redress schemes – which are only compulsory for managing agents i.e. someone instructed by someone else – do not apply unless they are part of a redress scheme anyway.
“Even then the Ombudsman are unable to provide assistance on the amount of the fees being charges for notice, certificate of compliance and the responses the LPE1, as their remit only extends to matters where a managing agent has quoted an amount and then gone beyond it – clearly not appropriate in the sales process where there is no contract between the parties for this service.
“Regulation and legislation do seem to be the only way to resolve this position where there is such a big inequality of power, and no course for redress other than the costly and slow First Tier Tribunal – who wants to pay £1,500 for a decision on a duplicated exorbitant notice fee for a decision 18 months after the event?”
Additional concerns have been raised during the study over the lack of understanding by prospective buyers in terms of the leasehold conditions, particularly in terms of their obligations and liabilities for the leasehold properties in question.
Recommendations put forward by the CMA involve leaseholders becoming better informed about the work being delivered by the property managers. Greater transparency should lead to increased liability for the property managers and freeholders on acting in the best interest of the leaseholders.
To view the documentation of the CMA study findings and recommendations, please visit https://www.gov.uk/cma-cases/residential-property-management-services
