Tag: empathy

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.

Emotional Intelligence

It’s the buzzword of the moment – Emotional Intelligence or EI as it is also known. The ability for the understanding of the self as well as others around you, and to use that intelligence to motivate, communicate and consider. We noted an article on the RICS website this week by Gary Williams which touched on the subject of emotional intelligence and how it can give businesses the edge over competitors. 

Concordia Residential are whole heartedly in agreement with Gary’s article. The subject of emotional intelligence, in our opinion, is utterly fascinating as well as totally relevant to business. Emotional intelligence was first highlighted to our founder, Abigail Teece, during her time at university.  It was a subject that was completely overwhelming to start with, but our founder soon became addicted to finding out more and more. Learning about what makes people tick, as well as finding out the reasons behind why people act and react the way they do was hugely interesting. During her time as an employee in the industry, Abi made a conscious effort to apply emotional intelligence wherever possible. To herself, to colleagues, to clients and customers.  It didn’t always work as well as intended and some people around Abi were adamant that she was “too soft” in her approach. They claimed she didn’t know how to “do business”.  There was even a “stupid woman” comment at one point (our eyes rolled at this too!). Many do not seem to realise that being understanding and showing consideration in business can benefit companies so much. Showing empathy and having understanding towards people makes for a better manager, a better colleague and a better person all round.

Our Core

As any astute business does, we keep an awareness of the market around us. We note that there are some competitors who are, as Gary notes, really focusing on “technological innovation, pricing structures, expertise and experience”.  And that’s great.  Indeed, Concordia Residential does have those factors in our eyeline. However our true core and the depth from which our mission statement is built gives utter kudos to emotional intelligence and its surrounding factors. We are big believers that business doesn’t have to be hard-headed, money grabbing or lack understanding.  It can show empathy, be generous and kind.  A good days work for a fair salary.  We must at this point, credit academics Carl Jung and Myers-Briggs for enlightening Abi’s journey through business with emotional intelligence. This has resulted in Concordia’s aim in that emotional intelligence within our company will spill over into providing the best customer service for clients and customers. Concordia Residential is here to make a difference.