© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Don't be surprised if your managing agent puts up his fees next year. It won't be because he's trying to make a fast buck, but because he's swamped with paperwork from new government legislation. One measure in particular will bring him more costs and large amounts of extra work. It's designed to safeguard you, the flat owner, from insurance malpractice. The trouble is, there's no evidence that the abuse they want to protect you from actually exists.
From January 2005 your managing agent will have to be regulated by the Financial Services Authority if he arranges your building insurance. The government is implementing a European directive designed to control companies whose main business is selling insurance. But, unlike other EU members, Britain is taking a draconian approach. Anyone who provides insurance, even though it is incidental to their business - vets, dentists, managing agents - will have to be regulated.
It doesn't matter that new regulations being introduced by the Office of the Deputy Prime Minister under the 2002 Commonhold and Leasehold Reform Act will also protect building insurance premiums, requiring managing agents to hold them, along with all service charges, in a separate, dedicated account. Your agent won't escape regulation. It has already cost him £1,200 to register with the FSA and from now on he will have to pay an annual FSA fee (as yet not fixed) and provide detailed quarterly reports. While larger agents can absorb the costs, middle-sized companies may be forced to put up their charges. Some reckon that when you also factor in the extra costs of the ODPM paperwork, you could be looking at an increase of £25 per flat. And small companies could be driven out of business.
So what's the benefit to you? Your building insurance premiums will already be protected. And, even when pressed, the Treasury cannot cite one instance of a managing agent convicted for dodgy insurance dealings. What most often concerns leaseholders is that agents don't declare their commission. Yet the directive doesn't cover this.
The Federation of Private Residents Associations, the Association of Residential Managing Agents, the Royal Institution of Chartered Surveyors - the protest against FSA regulation has been industry-wide. In vain. The government is pressing ahead, introducing elaborate rules to stamp out an abuse that doesn't exist. There's more than a touch of Kafka about it. And who'll pay the price? Flat owners.
Jane Barry
Associate Editor