The Benefits of Becoming a Director of Your Development’s Management Company

Everyone likes to feel in control of their lives, both in a professional and personal capacity. Where you live is certainly one of the most important aspects in anyone’s personal life and, if you pay a service charge, becoming a director for your place of residence brings a great deal of control and security. Many developments operate a system whereby there is a management company which is written into your lease and they are responsible for carrying out the landlord’s covenants (such as the cleaning, the gardening and all the communal items).  Some developments have a Right to Manage system in place, but with either of these systems, you can opt to become a Director of the board.  This will give you and your neighbours more of a say in how your service charge money is spent and what happens on your development.

Directors can view financial statements, be involved in setting spend limits, approve costs, set budgets and be part of the decision-making process toward the upkeep and maintenance of their development. You may be surprised at just how easy it is to become a director.  Depending on the Memorandum and Articles of Association (known as the Mems & Arts) for your management company, you could be signed up to be a Director of the board within a week.  By contacting your current managing agent, you can ask them to review the Mems & Arts and advise you of the process for your development.  Every development is different, but it is then normally a simple case of filling in a form and your managing agent/company secretary will do the rest for you.

There are of course, responsibilities that come along with being a Director, but this should never put you off joining the board.  Your experience and skills will benefit your development more than you realise! More can be found out about being a Director on the Leasehold Advisory’s website where there is a great podcast about it all.  

Some people tell us that being a Director of their management company takes up too much of their time or is too much work. We at Concordia Residential enjoy meeting our residents and always encourage the taking up of directorships.  It is your money and your home after all, and we want you to be involved.  With the right managing agent and the right service package, it should never take up too much of your time – that’s what your agent is there for.  We believe in the harmonious, democratic running of people’s homes and understand the importance of sound leadership and proactive management for your development.  We do, of course, have to follow the lease and the law, but a resident’s input and decision making as a Director is invaluable. 

Concordia are always delighted to offer consultations – free of charge – to folk wishing to become directors. We can review and explain your lease and your Mems & Arts, along with any legal issues.  We feel it is time well spent to ensure directors have a sound understanding of how their involvement helps, which will only result in a confident, smooth management process moving forward.

Trusting a New Business

We were recently approached by a potential client who wrote to us asking about our managing agents services. We love hearing from people and we were really interested as to why this particular client had contacted us and what their background and reasons were in searching out a new leasehold managing agent. We were really touched to receive a very detailed and considered explanation of the deliberation and thought process the directors had gone through in choosing Concordia Residential.  The client has very kindly given us permission to share this with you on our blog.

To Concordia,

We were becoming increasingly frustrated with our current managing agent, but none of us really approached the subject of changing as we all thought the fact they are well established and large, they must be OK. Each of us thought perhaps we were each being a bit fussy.  Indeed, I personally felt worry that, by changing to another large, well known outfit we would be jumping from the frying pan into the fire. However it was at an impromptu directors meeting in the garden where two of us had an honest discussion about the fact that it wasn’t working well anymore and neither of us were happy.  It was taking up so much of our time to chase our managing agent for things which should be automatically looked after.  We took our thoughts to a meeting with all directors and I was given the task of researching new agents.  Not a task I desired, but a needs must situation.  As part of researching a change I discovered yourselves who claimed to be a new and supposedly different type of agent. I am very aware that I may fall foul of clever marketing and heady promises, and I was nervous about leaping into the unknown.  A few of the questions we as directors asked ourselves were as follows:

  • How can we establish that the agent has the correct qualifications?
  • How do we know they will look after our money?
  • Do they have any experience in this this industry?
  • Will they be too busy trying to grow to pay any attention to us if I need advice?
  • Will they have disappeared this time next year?

One of the things we like about Concordia Residential is that it was easy to find the answers to our above questions.  Not only were the details on your website clear, but I could also research the RICS website about you (to find you are regulated by RICS), find you on LinkedIn (Abi your profile was informative as well as the Concordia page) and the IRPM website (to see that you were MIRPM qualified). We also liked the fact that you and your team were able to give us clarity about your company’s ethical ethos as we were unclear what it meant.  To know that your operation is focused on actually making things better for the residents and that you are not interested in taking lots of commissions as well as enabling us to use the contractors we want is refreshing and different.  Furthermore, you actually sent us the information about the bank you use, Metro, and information from Metro themselves (including details on interest rates etc).  This reassured us greatly.

It’s interesting, having spoken to Concordia, that I now realise a new business can mean passionate, experienced people.  People who are determined to put right all the wrongs, the negativity and the bad practice they have encountered, by starting afresh and doing things a new way, a right way, an ethical way.

We have decided to make the change. Change is good and we look forward to a much better, more resident focused approach from Concordia when we join you in September.

Pitfalls of Competitive Advantage for a Managing Agent

The management of leasehold developments is a hugely competitive market.  In what is an unregulated market, many leaseholders take their chances with one or another managing agent who can talk the talk. But how many of them can actually walk the walk? And how do the attitudes and behaviour of managing agents in the industry reflect on reputations and work ethics? 

Picture the scenario – you have decided you need a new managing agent and you want good service. So, you begin your search to find out who will serve your development the best. Perhaps you want the biggest managing agent as you feel peace of mind knowing that so many other leaseholders use them.  Or maybe you want a local managing agent, one who knows your area and perhaps your building already. Alternatively, you might want the agent who offers the cheapest rate, believing you are getting value for money.

You may want a recommended managing agent via an industry body (RICS or ARMA), or perhaps you had an introductory letter through your door. Some leaseholders use Google and others may have seen an advert on Facebook. Whichever way you find them, managing agents want your business and they will do what they can to get it. Once they get it, they of course, want to protect it. But surely the best form of protecting their business, is by giving the best service and keeping their promises? It seems that many agents unfortunately don’t do this.  Perhaps these competitors should turn their focus onto serving their customers in better ways. It is sadly, indicative of a wider problem in the industry. Concordia’s ethical stance is a threat to some, but we don’t apologise for that, the leaseholder is paramount to us and we will continue to try to affect change for them.

We recently attended the Institute of Residential Property Management’s Annual Conference in London, where it was clear that the industry has a certain culture. Comments from speakers such as “self-regulation won’t work” (Lord Best), “culture change is needed to focus on customer service and treating the leaseholder as the end user” (Mark Prisk MP), and “the number of complaints is rising” (Katrine Sporle), all indicate that something has been very wrong in the sector for some time. Many managing agents see the leaseholder as a commodity – a cash-cow that they can milk dry of all their hard-earned money. All the hidden charges add up – paying by standing order (up to £50.00 a year with some managing agents!), paying for permission to let (even when it is not the managing agents permission to give…), extortionate debt collection fees charged out as soon as possible (even if you paid, but forgot your exact reference), excessive insurance commissions (sometimes leaseholders will be paying up to 60%! Imagine that – of the £1,000 insurance charge per year, £600.00 of it goes to the managing agent). All these added extras, and more, go into the managing agent’s pocket. This is not making a fair living – it’s extortion in our opinion and it’s not morally right. It’s no wonder that managing agents don’t want to lose any clients and that they are fiercely competitive!

So, when a new agent, such as Concordia Residential, comes onto the market with their competitive edge of doing business ethically and without all the hidden extras, it is understandable that some managing agents may become twitchy and uncomfortable. Professional courtesy and healthy competition would radically change the culture of our industry for the better. Everyone in the leasehold management sector caters to different desires of the end user and surely, we should all be respectful and courteous of each other, supporting the different ways we can all help our leaseholders. 

Concordia Residential welcome with open arms the upcoming mandatory regulation in the industry to ensure that malpractice is filtered out. As Lord Best stated, ‘self-regulation doesn’t work’. The culture of the industry needs to change in order to benefit the end user – the leaseholders and tenants. And this is a huge part of Concordia’s mission and reason for existence.   

Freedom

So many of the leaseholders we meet for the first time tell us of the lack of freedom they experience with their developments and the things they feel unhappy about. 99% of the time, these experiences are negative and have created a hostility towards their current managing agent and a reluctance to pay service charges.  This is understandable when leaseholders don’t see any tangible evidence of how their service charges are being spent, alongside the lack of information provided to the leaseholder of what their money is spent on.  Furthermore, leaseholders do not feel listened to.

So many of the leaseholders we meet for the first time tell us of their experiences with their developments and the things they feel unhappy about. 99% of the time, these experiences are negative and have created a hostility towards their current managing agent and a reluctance to pay service charges.  This is understandable when leaseholders don’t see any tangible evidence of how their service charges are being spent, alongside the lack of information provided to the leaseholder of what their money is spent on.  Furthermore, leaseholders do not feel listened to.

We recently met a lovely lady who lives on a large development in Essex, who expressed huge regret over buying her flat, all because of parking issues.  From our discussions with her, the parking issues could have been managed more to the benefit for those people who live on the development, but it appears that the managing agent has chosen not to listen to the concerns of the residents and have fallen behind with understanding of how the lessees feel.  Whilst speaking to this lady, it saddened us to hear one phrase from her of which was; ‘there’s nothing I can do about it’.  Hearing this expression of hopelessness was heart breaking.  The fact of the matter is that there is something that can be done.  Leaseholders can have control and they can have a say and they can have freedom from issues such as this dominating their lives.

From a ten-minute conversation, the lady we spoke to was empowered to become a director of the management company for her flat, so that she could then take forward her concerns and use the options and solutions discussed to make the parking situation better.  The development is home to lots of people, and their homes need to work in the best way for them.  It is acknowledged that leases can sometimes provide restrictions on solutions, but if that is the case, then surely communication with the residents is a must to explain the lease and ensure everyone is informed.

It was obvious to us that the residents at this development could and should have been better served by their managing agent. With her newly acquired knowledge and pending directorship the lady will soon be able to influence change for her development.

This is just one of many sad stories. Everything from badly maintained communal gardens to broken entrance doors that remain insecure for months, to dirty communal interiors and bad lighting. We hear these things and many more on a regular basis.

The other thing we hear is that lessees feel helpless and don’t know how to change their managing agent. More can be found out here about appointing a new managing agent. Often contracts are incredibly restrictive, with the onus on the lessee directors to identify a small window of opportunity in any given year to serve notice.  Concordia offer flexibility for leaseholder Directors and don’t tie people into a contract that is difficult to exit.  Our contracts are initially for a year – we do this as it normally takes a year to get a development working the way it should and to get everything right.  We get to know your development and find out which facilities are working to your satisfaction and which are not.  We look at why and what solutions there are available. This time enables us to make any necessary changes and then for you to experience those changes.  If you wanted to change from our service, you can do so easily with a short notice period of a month at any time. We believe you deserve the freedom to choose the services that are best for your development, whether that be a managing agent or any other type of contractor.

We have witnessed the visible effects on directors and leaseholders who have chosen Concordia Residential and achieve freedom.  From our initial meetings where the atmosphere in the room is one of anger and suspicion to, quite literally, an hour or so later, one of relief and anticipation of a much happier future with smiles all round! They have found that breaking free, with our help was a far easier process than they feared. Often, it’s the worry of the hand over process and the thought of a confrontational response that holds them back. Nobody wants to deal with those scenarios. We at Concordia will help leaseholders every step of the way. We are talking about people’s homes and lives.  Freedom to enjoy both should never be in question. Contact us now to find out more.

The Ethics of Credit Control

A service charge for a leasehold property is one of those bills that has to be paid as per the terms of the lease agreement. It is what the leaseholder agreed to when they signed the lease to their property. The payment of the service charge means of course, that the building and any common parts to the development can be suitably maintained. However, what happens when the service charge isn’t paid? Managing agents, like us here at Concordia Residential, are employed by developments to carry out credit control of the service charges as part of their management remit. This includes estimating future service charges, issuing service charge demands (although we feel demand is not the nicest word to use), collecting the monies and of course having to chase leaseholders when service charges are not received. This blog is about the ethics of that credit control and Concordia Residential’s opinion on the matter.

The Process of Debt Collection

Most managing agents, rightly so, will have a process in place to carry out the collection of unpaid service charges, also called debt collection.  This of course has to be adapted to be in line with any terms of the lease agreement being managed. Click to find out more about service charges.

Many would assume that the debt collection process and any relevant charges are explained fully to the directors of a development prior to the directors selecting that managing agent.  Unfortunately, it is all too common that many directors do not know the full extent of a managing agents debt collection process or charges, nor are they informed if either of these are changed at any time.

Experience has taught us that debt collection charges against individual leaseholders can be extortionate and completely unjust in this industry.  There are no apparent ethics, nor is there regulation over the amount of such costs and it can be sickening to see how some leaseholders are treated when faced with difficult times.

Potential Charges for Debt Collection

Managing agents can charge huge amounts of money for a simple letter chasing any service charges due – £100.00 in some cases for a first letter!  Thereafter the letters get more expensive and are sent out in quick succession, seemingly without a care for the fact that debt is now increasing against the leaseholder.

Furthermore, managing agents can then charge to refer a case to a professional debt collection agent.  We have seen charges for this referral run up to £250.00. 

So far, 3 letters at £100.00 each, then a £250.00 referral fee, and the leaseholders debt has already increased by £550.00 and they may not even know about it.  How is this ethical or justified and where does the money for the letters and debt referral go?  We are sad to reveal that the money more often that not goes directly to the managing agent and is normally classified as an ‘income stream’ to them. 

Concordia believe the ethics of this is simply not right or justified.

Additional Aspects

There are some additional aspects to consider with the above, in that most managing agents will need to employ people within a credit control team and those people need to be paid a salary. Indeed there is a cost to this, but surely the cost should be covered in the management fees charged to the development? Also, many will argue that the need to have a credit control procedure is essential. This is agreed with, however Concordia do not think this should be an aggressive process, nor should it be classified as an income stream to the managing agent. Surely the excessive fees and hard-lined approach are most beneficial to the managing agent and not to the development? It is indeed true and prudent that the development needs the service charge in order to operate, but our view is that there is a right way to go about it without exploiting leaseholders and in turn creating a more harmonious development. Debt collection fees are some of the hidden charges many managing agents have which we at Concordia find utterly immoral.

Ethics First

If you are a leaseholder, would you not prefer some empathy and understanding if your financial situation meant you got a bit behind in paying your service charges?  Wouldn’t you wish to have ethics put first, with a phone call to simply say your service charge hasn’t come through this month and is everything ok? Would it not be better all round to have a managing agent who you can talk to about it all and who doesn’t simply send you down their debt collection process in order to generate more income for themselves? This is what we believe is ethical and this is what Concordia can give you. Get in touch with us to find out more.