Appointing a managing agent

Here are some ideas for the process of finding an agent that suits you. Not all may be appropriate to your situation.

1. Draw up a schedule of the services you want from a prospective agent. See Appendix 1 for a checklist.
2. Seek recommendations from other lessees in your block and elsewhere.
3. Go to websites of possible agents and get basic information from this source.
4. Check residential property tribunal decisions on GOV.UK for agents’ names appearing.
5. Invite possible agents in for an informal meeting first before asking for a formal tender.
   1. It will help these informal meetings greatly if you can get hold of a copy of a standard lease for the block and of the annual statement of account for service charges. Any good agent will want to look at these.
   2. Explain any problems that you think will need to be tackled, current debtors, relations with current agent, state of finances of the scheme. Any good agent will want to ask you relevant questions to establish what they might be taking on.
   3. How well the agent can offer ways to tackle existing problems is a good test of what they can do for you.
   4. Who will be your contact if that agent takes on management? You want to meet that person or persons to see if you can work with them. What happens if that person is sick or on holiday?
   5. Who will handle phone calls or emails from the directors and lessees?
   6. Who will choose which contractors are used for the block? Do you want to retain final approval?
   7. Ask about disclosure of commissions including insurance if this is something you want the agent to arrange for you. Agents should not take any commissions from service contracts unless they are agreed in advance by the RMC’s directors.
   8. How often will you get financial reports on the service charge income and expenditure? Will you be able to see the invoices and receipts and other supporting documents at regular intervals?
   9. Some other possible relevant questions are in Appendix 3.
6. Speak to RMC directors in other blocks managed by the agents you then may invite to tender as the next stage. Or check out any references or testimonials you have been given.
7. Formal tender stage – see Appendix 2 for a draft letter to use.
8. Contract stage – both the Association of Residential Managing Agents (ARMA) and the Royal Institution of Chartered Surveyors (RICS) have model management contracts/agreements. Make sure you include in the contract a list of documents that will have to be passed on if the contract ends.

Professional qualifications to look out for in some of the persons working for managing agents include membership of the Institute of Residential Property Management, RICS, or, in the social housing sector, the Chartered Institute of Housing.

For firms of agents look out for membership of certain established professional trade bodies. Many agents are members of ARMA and/or are regulated by RICS, or those who specialise in the management of retirement schemes may be members of the Association of Retirement Housing Managers (ARHM).

The advantages of the membership of a recognised professional organisation are:

• members will have professional indemnity insurance to assist you if the agent has acted negligently
• members will hold fidelity insurance in case a member of staff is found to have stolen monies
• members will be checked on the way they hold monies collected on behalf of their clients
• members will be required to have a complaints handling procedure and provide access to an independent redress scheme of which they are a member

It is important to confirm the prospective agent’s professional indemnity insurance. If the agent is a member of a professional or trade association, professional indemnity insurance will be an automatic condition of membership. However, the existence of the cover, and its extent, should be checked.

Where a resident management company delegates tasks to a managing agent, the residents’ company will remain legally answerable for any neglect, omission or mistake by the agent and should be sure that the agent has the means to provide compensation or damages.

Management of residential leasehold property should be in accordance with approved Codes of Practice. The government has, to date, approved two Codes of Practice for residential leasehold housing, one produced by ARHM relating to retirement housing schemes and one by the RICS relevant to all lessees paying variable service charges not on retirement housing schemes.

When appointing an agent, always ask the agent to confirm that they comply with the relevant code. Members of ARMA agree to follow one or both of these codes of practice.