Flat owners should be given additional rights against property managers, study recommends

The Competition and Markets Authority (CMA) has carried out a study that found that many leaseholders suffer from excessive charges or poor service by property managers. The CMA is recommending a change in the law that would allow flat owners to “vote out” poor property managers, if 50 per cent of the leaseholders agree.

The CMA estimates that some 5 million leaseholders are potentially affected.

The CMA also recommended a series of voluntary changes, to improve transparency between property managers and leaseholders. However, it stopped short of recommending that the property management industry should be regulated, as it is already in Scotland.

The Association of Residential Managing Agents (ARMA), in response, said it was already working to improve standards in the industry. Earlier this year it introduced a new consumer charter called ARMA-Q, which provides a better system of redress for leaseholders who are unhappy.

The CMA report recommends:

* Property managers should set out clear improvement plans, justifying all charges and any commission they are earning. They should also disclose any corporate relationships with contractors or landlords.

* There should be a new mediation service, to prevent leaseholders having to go to court if they are unhappy about the level of charges.

* Flat buyers should be given more information about service charges and ground rent when they get the property details from the estate agent.

While the voluntary changes are likely to be approved by industry bodies, the law change is unlikely to find its way into legislation until the next Parliament.