RMC Directors – Challenge your managing agent
It is important for Directors of Residents' Management Companies (RMCs) to find a balance between trusting and scrutinising their managing agent. It is important for Directors to trust a managing agent, but this should not be at the expense of objective scrutiny.
It may sound like a strange comment coming from a managing agent, but so often we see RMC Directors having to take responsibility for the consequences of placing too much trust in a managing agent.
We are experiencing an example of this with a block that we have just acquired where a gutter repair turned into a £250k project based on the advice of a managing agent. The Directors of the RMC placed unwavering trust in the advice being given by the managing agent which on objective analysis was misplaced.
While the gutter repair revealed that additional major work was necessary, the extent of the project proposed by the managing agent grew and grew allowing the managing agent to rack up additional fees. This project is ongoing, although initial indications are that the project is deliverable for circa £100k – still a staggering amount of money, but a significant reduction from £250k.
Thankfully a property owner did not place unwavering trust in the managing agent and managed to highlight the deficiencies in the managing agent’s approach.
Other examples we’ve experienced with blocks that we have acquired include Directors being unaware that there is no reserve fund because the managing agent has used it to support overspending on the service charges, and Directors being unaware of incurring legal fees to recover service charges that exceeded the amount recovered!
Directors of RMCs do need to trust their managing agent. It is an important component of a good working relationship. But that trust shouldn’t be unconditional. The managing agent should still be scrutinised and their advice viewed objectively. This is especially so where a managing agent's proposal will result in additional fees.
Our approach of total transparency and our Customer Portal makes it easy for RMC Directors and property owners to scrutinise us. When presenting proposals to Directors we will always set out the options clearly and concisely along with associated risks, conflicts of interests and any additional fees.
If you are a property owner who is concerned that the managing agent is not being scrutinised enough get in touch and we can provide you with advice on how to do something about it.