A market study into the provision of residential property management services to leaseholders in England and Wales has been launched by the OFT.
The scope of investigation has been widened to include residential property management services for properties where local authorities and housing associations are the freeholders, as well as those with private sector freeholders.
These have been brought within scope because of similarities in the concerns expressed by respondents in relation to the provision of property management services to former local authority properties.
The OFT said it would look at whether the residential property management services market was working well for leaseholders and freeholders, including:
* Whether managing agents and freeholders have the same interests as leaseholders in, for example, keeping down costs for maintenance work or building insurance;
* Whether leaseholders have sufficient influence on decisions taken by freeholders or others on the appointment of managing agents and the supply of residential property management services;
* Whether there are barriers to switching and whether competition between property managers more generally is working well;
* Whether managing agents' and freeholders' choice of contractors and services may be influenced by links with associated companies and the availability of financial commissions;
* Whether it works well in practice when leaseholders exercise their right to manage their own properties.
Rachel Merelie, Senior Responsible Officer for the study, said: "Service charges for the maintenance of a building can be substantial and we want to make sure that leaseholders are getting a fair deal.
"We are concerned that management agents and freeholders may not be incentivised to keep maintenance costs down and that leaseholders may not receive value for money.
"We will look at whether there is sufficient competition in the market generally as well as taking a close look at specific areas which have been brought to our attention, including services provided to retirement properties."
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Comments
Generally, leaseholders get the managing agents they deserve. Our firm recently resigned from the management of a substantial building in Central London after three years of sorting out the mess left by the previous agent. Unfortunately, some leaseholders think its reasonable to treat the agent as a whipping post. It was a thankless task and despite the RTM committee asking us to stay and offering more money we declined. Other agents I speak to have the same experience. I think that's why most managing agents are very detached glorified accounting facilities.