Professional Body Welcomes Legislation to Raise Standards in the Property Management Sector

Posted by The Property Institute on 9th February 2024 -

The Property Institute has welcomed a proposed amendment to the draft Leasehold and Freehold Reform Bill for the regulation of property agents across much of the sector.

As the leading professional body for residential property management, The Property Institute has continued to call for regulation for residential property managers to drive up standards and protect consumers from unscrupulous operators.

Tabled by Shadow Minister members of the Public Bill Committee, Matthew Pennycook MP and Mike Amesbury MP, the amendment is a significant step forwards on this important issue. It comes after The Property Institute’s written evidence to the Committee, with further oral evidence from chief executive Andrew Bulmer last Tuesday January 16.

There are an estimated 3.5 million leasehold flats in England, managed by residential property managers, and they are often tall and complex buildings. This represents around 14% of all residential homes in England.

Residential property managers provide services such as health and fire safety, maintenance of the common parts, and manage the finances of the building. In leasehold blocks they may hold substantial sums of leaseholder money, such as reserve funds. Despite such important responsibilities, and associated complex legislation to navigate, residential property managers are not currently required to hold any qualifications to demonstrate competence. While many do so voluntarily, too many do not.

Meanwhile, news of poor quality and poorly managed homes continues to dominate the headlines – with stories of properties with significant damage to buildings and common parts going unrepaired. Poor management and incompetence by unqualified property managers causes detriment and harm to residential communities, placing them at risk financially, and even more seriously, in matters of building and life safety.

Introducing mandatory qualifications is an obvious first step to drive up standards of competence and protect consumers from harm.

The situation is becoming ever more urgent, not least with the implementation of the Building Safety Regime. The Property Institute is calling on the government to take the opportunity presented by the current Leasehold and Freehold Reform Bill to introduce a regulatory regime for the property management sector. If Government lacks the appetite to deliver robust regulation, then at the very least it should protect consumers by mandating minimum qualification requirements and publishing a statutory code of practice for property managers. The government has already made qualifications mandatory for social housing managers in June 2023. The Property Institute now wants the government to close the gap and mirror mandatory qualifications for property managers managing blocks of flats in the private sector.  All residents need to be protected from inadequate operators and bad practices – regardless of tenure.

Andrew Bulmer, Chief Executive, The Property Institute, said: “It is more important than ever that the millions of residents in multi-occupancy buildings are served by competent, ethical, and regulated property managers. Everyone, regardless of tenure, deserves to live in a safe and well-managed home. I was pleased to be able to emphasise our call and the need for regulation of the sector  to the Public  Bill Committee recently and we welcome any opportunity to work with the Government to see regulation of the sector come forward.”

“Many buildings are mixed tenure, with both social and private homes, so the inconsistent approach to mandatory qualifications between the tenures is confusing. Furthermore, vulnerable residents don’t just live in social housing – they live in privately owned or rented homes too. As a minimum, all property managers must demonstrate competence through mandatory qualifications. The current situation cannot be allowed to continue whereby a minority of property managers are unqualified and provide a poor service, leaving repairs outstanding, and residents at risk.” 

“The competence of property managers directly impacts the safety, financial security and wellbeing of millions of people. Competence must be assured for all residents and cannot be a lottery any longer.” 

In 2019, Lord Best published a report that set out recommendations to uphold standards for all managing agents and drive incapable and unfit agents out of the sector. The Property Institute argues that since the report, the urgency to address the situation around standards in the sector has become far more pressing and is asking the government to consider its proposal for mandatory regulations. It suggests mandatory qualifications will drive out problematic and unethical operators.

As part of its efforts to drive change and bring the matter to the attention of the decision-makers in Westminster, The Property Institute – along with other industry organisations – wrote last autumn to then Housing Minister Rachel Maclean, to call for change and is continuing to press for the same with current Housing Minister Lee Rowley.

Andrew Bulmer continues: “While we welcomed the decision to protect social housing tenants through the new legislation introduced last June, the rules create inconsistency and unfairness. For example, in a tall residential building of mixed tenures, the latest social housing legislation means the social housing tenants in the building have the assurance of a qualified property manager, but the private sector residents don’t. This gap needs to be closed to ensure that all residents in mixed tenure tall buildings receive a safe and high-quality service from a competent, qualified, and diligent property manager.  

“We are eager to work with government to drive this forward, through the introduction at the earliest opportunity of mandatory qualifications for managing agents to continue raising standards in the sector.”

The Property Institute is the leading professional body for the residential property management sector, representing over 6,000 property managers, and over 350 managing agent firms. It continues to call for regulation of the sector and work with government to drive forward this legislation.

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