The Managing Agent

Agent Standard advice is to appoint an agent. The logic is, er, logical.

The lease very likely allows collecting for the cost of a managing agent but silent or vague on whether the RTMC could collect for its costs if self-managing.

Then there is the problem of apathy. Leaseholders in my experience may hate their agent and want the right to manage, but few interpret this to mean actually doing anything for themselves.

Then there is the problem of expertise. The theory put about by the leasehold industry is that managing agents are experts. In twenty years I have yet to meet one of these agents and I have lived ‘under’ six managing agents.

I would argue that if it could be achieved, leaseholders should self-manage as the only way to guarantee they will get the service they want and deserve. No matter how carefully the RTMC prepares its agent pre-contract specification, it seems impossible to find an agent who will respect the contract or its ‘client’ once the document is signed.

There are practical questions/decisions you need to have prepared ready for meeting with potential agents (making clear the meeting is a preliminary stage to formal competitive tendering):

  • How often, if at all, do you wish the agent to attend board meetings (making clear these will require out-of-hours attendance)?

  • List of all your services.

  • Describe your premises, include copy of lease and recent accounts, and describe RTM company, its directors and their designated functions etc.

  • How you wish to manage the premises, not how the potential agent thinks. (Though by my experience they will promise to love and obey and then go their own way).

  • Any problems you think need to be tackled; current debtors; relations with current agent; state of finances of the scheme.

  • A good agent should ask relevant questions like these to establish what they might be taking on – how well an agent offers ways to tackle existing problems is a good test of what he/she can do for us.

  • Who will be your contact if that particular agent takes on management?

  • You want to meet that person, or persons, to see if you can work with them, not the agent’s sales manager. What happens if that person is sick or on holiday?

  • Who will handle phone calls or emails from the company or from lessees?

  • Who will choose which contractors are used for the block? Do you want to retain final approval?

  • Do you wish to retain arranging insurance? Otherwise you must ask about disclosure of commissions. Agents should not take any commissions from service contracts unless they are agreed in advance by the RTMC.

  • How often do you want financial reports on the service charge income and expenditure? Will you be able to see the invoices and receipts documents at regular intervals rather than just when the final accounts are compiled?

  • LEASE provides a questionnaire that could precede the informal meetings.

  • You need to check out any references or testimonials before finally choosing an agent.

“Our company, our property, our money”

Managing means the Board sets the agenda, not the agent. This is basic contract law and nothing to do with any code. The RTMC is the ‘principal’ party to the contract. An agent contract does not give the agent the power to run the RTMC. Though they do seem to try.

You must clearly establish and assert the services you want to contract from the agent. If you have supplied a clearly worked-out set of criteria, together with all the basic information the agent needs to compile their submission, the informal meetings can avoid pointless discussion of services you do not need, as well as avoid fees based on unneeded services. Also, your evaluation can be based on quotes specific to your requirements. (See evaluation criteria )

Evaluation of agent pitches

This needs to be done after you have compiled all the information from each agent who answers questionnaires and attend informal meetings. The College of Estate Management suggest including qualitative ratings in an assessment:-

Agent assessment criteria

AGENT IDENTIFIER (SEE LIST)

A

B etc

Qualitative assessment

*

*

Acceptable fee structure? (cheapest doesn’t mean best)

Experience of managing similar properties?

Proximity and staffing (for site visits etc)?

Professional indemnity?

References we can check?

Debt management procedure (watch out for expensive “all-inclusive” methods)

Quantitive assessment (include VAT for costs)

*

*

Basic fee per unit

Top-up fee (eg late payment percentage)

Inspection fees

Number of site visits included in basic fee

Out of hours charges per flat p a

Major works fee

Minor works fee

Additional services – attending meetings fees

Any onboarding fee? (This is where you pay them extra to set up their own bookkeeping systemwithout which they could not manage)

Individual trust bank account? (Avoid pooled accounts)

Who gets any bank interest?

* RATING: Rank your preferences where 1 = First Preference; 2 = Second Preference; 3 = Third Preference etc (if you think an MA’s response was so poor that it does not deserve a preference put “Nil”). Columns are added for each agent who has pitched.

The art of failure.

RTMCs who fail to learn their role will fail in the end. The most likely source of failure will be the managing agent. Delegation does not mean abdication. Give an agent an inch and they will take liberties. When any stuff hits the fan they can always resign. Never take their ‘advice’ without checking things out. Never.

This topic deserves more attention. I will likely return often to it in the blog.

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