How Property Management Protects the Value of Homeowners’ Most Valuable Asset

Jack Fulton

The Scottish Consumer Council recently said that moves to introduce a set of standards for property managers and factors, first recommended in 2003, must be revived to deal with widespread dissatisfaction amongst service users.

That call came with the publication of a snapshot survey of private owners and owners of Right to Buy properties in the Denniston area of Glasgow which found that half of respondents had complained about their property managers’ work.

However, the public would be well advised to look closely at how this survey was conducted before jumping to the wrong conclusion. For example, the survey covers all providers of property management, including public, private and Registered Social Landlords. And whilst members of the Property Managers Association Scotland look after more than 150,000 units, this survey relates to only 134 units in one area of Glasgow.

Based on the figures used, 51% of those 134 were within the private sector, of which a percentage were self managed. That means we are talking about a sample of around 34 respondents out of a pool of 150,000. Hardly representative! To be fair, the survey makes it clear that the report was indicative only of the types of problem experienced and should not be taken as being a representative view of all consumers of property management services, even if that is how it seems to being misinterpreted by the Scottish Consumer Council.

Nevertheless, a crucial factor in the results of this flawed survey was the fact that few of the respondents knew exactly what rights they had and many were unsure what redress they had when things went wrong.

There is a common misconception amongst many home owners that a property manager is ‘by definition’ wholly responsible for the maintenance of buildings under shared ownership. In fact, clearly it is the owners of a building who share responsibility for its maintenance. After all, it is the property owners who employ a property manager to act on their behalf and to advise on any maintenance and repairs that might be required.

But whilst the property manager can advise on what repairs are necessary and arrange for repairs to be made, he can hardly assume responsibility for repairs being made since that is dependent, on sufficient funds being made available to undertake these repairs. Since it is their money and their property, evidently it is the responsibility of the property owners that any repairs required are made to their property.

The Tenements (Scotland) Act was recently introduced to compel flat owners in Scotland to pay for repairs, even if they do not give permission for the work to be carried out. Under the Act, repair work to communal areas now only requires the agreement of the majority of residents, as opposed to unanimous agreement, albeit all proprietors are responsible to pay a proportion of costs applicable to works of a communal nature.

As such, the Act is designed to make sure that basic repair and maintenance work can be carried out – even if a minority in a tenement property does not wish to co-operate or pay for their share of the work.

The question of debt is a constant problem for property managers. The Tenement Act seeks to address the debt problems of those flat owners who are preventing the progress of major repairs due, not because they are unable to pay, but because they are unwilling to pay.

The vast majority of new housing developments today are looked after on an ongoing basis by property managers charged with co-ordinating all the various services required to maintain properties and protect their value on behalf of property owners.

Property management services will typically include regular inspections, organising common repairs and instructing the required trades. It will usually also involve arranging a range of maintenance contracts and organising gardening contracts for all communal landscaped areas. The same regime is applicable to the tenement properties.

In addition, property managers will be expected to advise on any problems of a common nature which an owner may encounter and try and ensure that all requirements are adhered to in the supervision of communal amenity areas and all electrical and mechanical equipment.

Of course, given that, for the vast majority of home owners, their property is their most valuable asset by a considerable margin, it makes sense for owners to appoint a professional manager to protect the value of that asset on their behalf. That is the ultimate goal of the property manager.

Jack Fulton is a Director at Ross + Liddell, the property people

ENDS

745 words