Competition and Markets Authority, which replaced the Office of
Fair Trading last April, is carrying out a market study of the
management of leasehold property, including where the freeholder is
a local authority or housing association.
The study was launched in March and is being carried out in
response to concerns - based on complaints and other evidence -
that some property managers may be overcharging customers,
providing poor quality services or spending money on unnecessary
works. There were also concerns about arrangements for handling
complaints or providing effective redress.
The CMA has issued an update paper setting out initial views
on which it is inviting responses. ARCH members would
do well to read it and consider submitting their views.
The CMA's approach seems to have been to lump together private and
local authority freeholds as if the same issues and principles
applied to both, except where the differences are so obvious as to
The report sets out a set of concerns about "the market", in most
cases without acknowledging or considering the implications of the
fact that there are significant differences differences between
cases where the freeholder is a profit-oriented private business
and those where it is a not-for-profit organization, either a local
authority or housing association. Thus, for example, the
report notes a "low level of switching among property managers",
where "switching" appears to be code for freeholders regularly
inviting competitive tenders for property management
Later, the report considers whether to recommend that local
authorities be subject to compulsory competitive tendering of
leasehold management services. While it provisionally comes
down against this proposal, views are invited on it. What
seem so far to have escaped the attention of the CMA team are the
many lessons to be derived from the experience and ultimate failure
of CCT in local government.
Where the report discusses the difference circumstances faced by
local authority landlords, some worrying points emerge.
The CMA commissioned MORI to carry out a telephone survey of 1,050
leaseholders, which found, among other things, that 52% of local
authority leaseholders reported ever having reason to be satisfied
with their property manager, as against an overall average of
More generally, the report notes that "while processes for
transparency and accountability, and for handling complaints,
tended in most cases to be better than in the private sector,
levels of leaseholder dissatisfaction with service quality and
value for money were lower." Various possible explanations
for this divergence are discussed.
The CMA has invited ARCH members to participate in a round table to
discuss the report and its findings early in September. I
will be writing shortly to selection of authorities with dates to
ask if they would be willing to attend. But if there are
other ARCH members who would like to be represented at the round
table, please do not hesitate to contact me at email@example.com.