How Easy Is It to Change Managing Agent?

Here is our practical guide to changing your block management company

Most agents keen to manage your block will explain how easy it is to make the switch. In theory, they are right. You serve notice on the incumbent, they graciously admit defeat, prepare a handover pack, transfer fully reconciled funds, and wish you all the best for the future.

Rather than look at the change of managing agent through rose-tinted glasses, here is a practical guide to getting it right, because it would be a shame to remain with an under-performing company due to anxiety about the handover process.

Know your rights and obligations

In the main, we manage leaseholder-owned or controlled residential buildings. These are Resident Management Companies (RMCs) which typically own the freehold of their building or Right to Manage Companies (RTMs) who have taken the management obligations away from the landlord. These companies are responsible for all contracts and services regarding their building, including the hiring and firing of managing agents.

Occasionally we receive enquiries from leaseholders, desperately disappointed with their in-situ agent yet they have no immediate recourse to oust it, often because the landlord and agent have a special ‘bond’. They do have recourse, though not immediate; seeking right to manage, collective enfranchisement or the appointment of a manager all take time, money or both.

So let’s assume you are a director of an RMC or RTM company, and you have reached a consensus with the rest of your board to change your agent. The majority of our new clients seek a comprehensive management service, so coming to Fry & Co is ideal. Take a look at the government funded Leasehold Advisory Service website for a checklist of services you may wish your managing agent to perform (scroll to Appendix 1).

Choices, choices

In an unregulated industry, Fry & Co is perhaps the closest a managing agent can get to being regulated. Whilst we are suitably accredited and demonstrably fit for purpose to manage residential buildings, many are not, so choose carefully.

Currently, the only statutory obstacle a managing agent needs to overcome before it is able to manage blocks of flats, is signing up to a redress scheme, which whilst important, is no indication of competence. Today, there are only two such schemes and Fry & Co is signed up to The Property Ombudsman. That’s the first prerequisite.

Then you may look at whether an agent is a member of ARMA or RICS. We are proud members of ARMA which means we have signed up to adopt and comply with numerous objectives of this organisation including compliance with the RICS Service Charge Residential Management Code of Practice. You should look for additional signs of expertise, as such as the agent being authorised and regulated by the Financial Conduct Authority (FCA) for insurance mediation activities. (Fry & Co is regulated by the FCA, not least as procuring buildings insurance correctly is arguably the single most important task a managing agent is expected to do).

Membership of a professional body is an essential precondition in our opinion however that does not automatically mean the agent is right for your building. Seek recommendations from friends and colleagues. Look at online reviews. Join a Facebook group and ask its subscribers who they would recommend in a particular geographical area. Have a think about the size of the firm you are looking to engage. The largest firms in England and Wales manage nationwide and look after between 10,000 and 300,000 homes. The smaller firms – like Fry & Co – are more likely to give you a tailored personal service.

Take another look at the Leasehold Advisory Service website here, and go to appendix 3 for some sample questions to help you shortlist a couple of managing agents from which to select a winner. If your block has certain issues that the current agent has failed to address adequately, pose the scenario to prospective agents and see how they would deal with it. Ask how they approach handovers from other managing agents, as their methods will be indicative of how they will manage your property day-to-day.

Interview your shortlisted agents via short Zoom calls. And if safe to do so, insist on meeting face-to-face who would be your principal point of contact (your appointed property manager). Try to get some one-on-one time with that person so you can get to know the firm, its culture and philosophy. Take references too, and try to speak to the referees on the phone so you can enjoy a free-flowing conversation.

Termination and Handover

Many of our clients have terminated the agreement with their managing agent the minute that they have had enough! The clock starts on what is typically a three-month period to find a new agent and have the outgoing agent hand over to the newcomer.

Try to stay involved throughout. Ask the incoming managing agent for a written handover status update to be sent to you say every couple of weeks. Remember that a diligent incoming managing agent will be delighted to receive handover information piecemeal, so that they can get the relevant information and data set up on their systems ready to go on their official first day.

Ask how you can help to push matters along. A bone of contention in the industry is when the service charge funds are transferred. Without funds, the new agent’s hands are tied, so your prodding the outgoing agent for these is usually much appreciated!

Tried and tested process

The inertia that prevented clients from changing their managing agent has largely dissipated. Online resources make it far easier to effect an orderly and informed switch. That’s not to say the outgoing agent will make things easy…they ought to, especially if they are an ARMA agent, but their energies may well be redeployed elsewhere. Your new agent will do everything they can to make the transfer a success so work with them, encourage them, and use this opportunity to build the relationship.

At Fry & Co, we use a tried and tested handover document to smooth the transition. We always try to meet with the outgoing agent, thus applying some direct yet polite pressure, facilitating a timely transfer of information and funds. Residential property management is built on relationships and as we know, all relationships need work – we fully appreciate that.

Richard Fry, Founder and MD, Fry & Co