Residential block management is becoming increasingly fractious. Since 2008 (the start of the decline in the housing market) lettings agents have, quite understandably, sought new opportunities. There has been an observable trend of lettings agents extending their business model to include the more specialist block managing agent role. The result is that non-specialist lettings agents are now taking on challenging issues like high service charges, the Right To Manage, and dealing with the Resident Management Company.
Lettings agents have, for decades, offered a property management service around, ahem, lettings. Lettings agents market a landlord’s property to find a new tenant and then manage the individual property throughout the tenancy. The management might include overseeing any maintenance issues and collecting the rent. And for this the landlord pays a fee.
More recently, however, lettings agents have extended their management offer to leasehold blocks. While it could be argued that this is simply a natural extension of the single property management service offered by lettings agents it is worth investigating the likely effectiveness of lettings agents in terms of delivering specialist block management.
Given the author is an experienced and innovative property management agent – who also has a portfolio of leasehold properties – he knows only too well how important effective block management is.
In researching this investigation we considered the key issues and spoke to professionals in the lettings and property management sectors, including some large flat managers in London. Both the lettings agents, and the property managing agents, came up with some interesting perspectives and the study threw up some surprising findings. Lettings agents can certainly have a positive role to play.
The following provides a summary of conversations with representatives from each sector. It provides the pros and cons of both approaches.
Lettings Agents – the upside:
- Local presence
- They know good contractors
- Quick attendance
- Regular attendance on site
- Strong property knowledge especially on commercial activity
- Know the kind of work that will add value
- Can offer expert lettings services to block leaseholders
- Better fit in the sense that smaller local agents will really care about the block because the business makes up a significant slice of their overall market share
Lettings Agents – the downside:
- Lack direct property management expertise
- Not necessarily technically knowledgeable
- Not experienced in leasehold property management law
- Have Split priorities (will their lettings business come first)?
- Poor sector image
- May lack financial clout (if they’re an independent local)
Property Managing Agents – the upside:
- Dedicated property management specialist
- Local presence: often employ a local property manager
- Expert technical knowledge (bricks and mortar)
- Expert property management knowledge (legislation)
- Better image (just)
- No split priorities pure property management
- Often got financial clout to secure economies of scale
Property Managing Agents – the downside:
- The larger Corporates have little local knowledge
- The larger Corporates are too big to care
- Property management may be lacking in ‘fleet of foot’ and be unable to respond as fast as a local letting agent
- Cannot offer expert lettings service to residential leaseholders
This suggests that the service offer made by Lettings Agents is actually pretty good. And while the author, a professional property manager, may be uncomfortable with the added competition the test has to be: is the extra choice net positive for leaseholders? The answer is yes.
The obvious question this research asks is can – and will – increasing numbers of specialist leasehold property managers be tempted to offer dedicated lettings services? After all they have a neatly captive audience. And how will the lettings agents feel about this brave new world?