My Lords, I am pleased to follow the noble Lord, Lord Young of Cookham, and I agree with the comments that he just made. I remind the Committee that I have been a leaseholder for around 30 years, and over that time I have dealt with several property management companies.
I wholeheartedly support Amendment 94 in the names of the noble Lords, Lord Best and Lord Young of Cookham, and the noble Baronesses, Lady Hayter of Kentish Town and Lady Taylor of Stevenage. I pay tribute to the dogged determination of the noble Lord, Lord Best, in pursuing the reform and regulation of property agents over a number of years, and, of course, to the sterling work of the noble Baroness, Lady Hayter of Kentish Town.
I fail to see why His Majesty’s Government should not support this amendment in full. I also fail to see why the Government have failed to bring forward their own measures to regulate property agents, which, as we have heard, are long overdue. I know that the Minister will say that this is all very complicated and requires detailed and thoughtful legislation, that she will describe how property managing agents are making voluntary strides to improve their standards and operation, and how there are redress schemes in place. However, I do not really buy that argument. This amendment gives His Majesty’s Government two years to lay down regulations to regulate property agents. That is enough time even for this Government, and if not them, then certainly for the next one.
No other sector I know of handles potentially millions of pounds of other people’s money but is unregulated by statute. The City of London looks at property management companies aghast given the lack of oversight. I will give some practical examples of why property management companies should be effectively regulated, following the comments of the noble Lord, Lord Best.
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My first example is relatively positive. I was the right-to-manage director in a mixed development for five years. The block is efficiently run by a professional
property management company headed by a surveyor. Legal and other professional advice is sought when necessary and the property agent, appointed by the RTM company, takes instructions from the RTM directors but is very responsive to individual leaseholders on any issues which crop up. However, it was not easy to get to this point. The previous property agent had to be taken to court and sued for, in effect, stealing service charge money, which it was forced to repay. The RTM company was formed as a result, but at great personal financial cost to a number of residents, who were left seriously out of pocket.
In another example in another block, the property agent was undoubtedly a smooth operation. The only problem was that it largely ignored the residents in the mixed development and made it clear that it took instructions only from the freeholder. Residents were charged fees for everything imaginable, including minor refurbishments. Although the service charges per square foot of the building were reasonable, the residents bore an unfair share of them. In effect, they were subsidising a number of commercial units and private members’ clubs. The outcome was service charges which rose by 50% in just two years. For a one-bedroom flat, the service charges were five times that in my first example but in a similar location. When challenged, the property agent told residents that if they could not afford the service charges they should sell up and leave the block. Having failed once to challenge the property agent and freeholder in court—remember that service charges have to be “reasonable” but not “fair”, nor even do they have to be “value for money”—and again at great individual cost, the residents decided that they were in no mood to have another go.
In my last example, none of the property agent’s staff were trained as surveyors or legal property experts—this is a large property management company outside London. Although standards have improved somewhat of late, previously, its management style was unacceptable and unprofessional. The member of staff who previously ran the block on behalf of the property agent took instructions only from one residents’ management committee director. New directors—and there were only two—were actively discouraged. The RMC’s articles of association were ignored. Those property agents came up with a pets policy, as pets were allowed only at the discretion of the directors. That proposed that should anyone request a pet, all their details could be shared by the directors and others on the estate, with no security whatever. I am not a lawyer, but that seemed to be in clear breach of the Data Protection Act 2018 and the GDPR. When that flaw was pointed out, the property agent did nothing.
On another occasion, a property agent staff member threatened a resident with an allegation of criminality, which again was a legal nonsense. As the noble Baroness, Lady Hayter of Kentish Town, said, this is not a role for amateurs. Neither are the current redress schemes fit for purpose. I have pursued one myself. They take many months and, at the end of it, a property agent may just be ticked off. The only answer is proper regulation of property agents, as we have heard and as set down in this amendment, and proper training and qualifications for property management staff.