WHY IT IS TIME FOR RADICAL CHANGE IN PROPERTY MANAGEMENT
Bernie Wales argues the case for dropping fixed charge fees.
Leaseholders have complained that service charges are too high, property managers are not good enough, they do not care about what happens and they do not reply quickly enough, if at all.
On the other side of the coin, managing agents have said that fixed fees are too low and as a result they do not have the resources to employ more qualified and experienced property managers. That means there are too many things to deal with, too many emails in the inbox, and not enough hours in the day … even with all the electronic wizardry we now have in the palm of our hands.
And yet both sides continue to maintain the same old fixed fee system. As therapists often say, “If you continue to do the same thing, you’ll continue to get the same result – so do something different. Change and the results might be better … maybe”.
That is why in recent months I have been calling for change. IRPM and ARMA are constrained by competition law and need to take care when talking about fees and fee structures. Also, some may be concerned that moving away from fixed fees will be to the detriment of leaseholders. I do not think that is the case.
Generally, leaseholders do not know what their property manager does – often for less than one pound per day. They have no compunction about emailing, texting or WhatsApp, Facebook or Linkedln messaging five or six times in swift succession. And the more they message, the more likely they are to get what they want – at no extra cost.
In the world of instant access that we all inhabit, managing agents and property managers have no time to explain all they do and how they do it with training, experience and knowledge. No time to show they provide extremely good value for that one pound per day – when they get the chance to do what they are paid to do, rather than endlessly answering messages.
Both sides are unhappy. And yet both sides continue to do the same thing and get the same result – over and over again. It is madness!
Looking forward to the rest of 2022 and beyond, we see leasehold reform, building safety reform, cladding and compartmentation remediation, minimum EPC requirements, net zero targets, licencing and regulation, commonhold and many other changes to the property management world. There is a shed load of extra training and work to do – little of which will be appreciated by leaseholders and residents in the blocks we manage. And the lack of understanding will only result in two things … an opportunity for rogues to exploit the vulnerable … and the opportunity for leaseholders to complain some more.
So surely the time has come for a radical change to the financial side of property management. I suggest the scope of fixed fees should be reduced only to those items which are entirely predictable: budgets, demands, accounts, newsletters and consultations. Everything else should be charged on a time basis, at a rate appropriate for the personnel needed to do those tasks, and a rate appropriate for the time of day/night. And those tasks, those rates, and the qualifications and experience of those undertaking the work should be explained fully to our clients. This could provide a massive marketing opportunity for individual property managers and agency firms alike.
We have a once in a lifetime opportunity for a paradigm shift here. We should grab it with both hands. We should charge what we are worth. We should have sufficient staff and resources to do a great, professional job. And with a lot of effort, we can change the mentality of our clients – so they appreciate paying good fees for great, cost-efficient work.
Bernie Wales is a residential leasehold property consultant and commentator.