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CMA publishes study of Leasehold Management Matthew Warburton - 12/12/2014

CMA_Report_300The Competition and Markets Authority has published the findings of its study of the property management market, including local authority management of leasehold flats. I drew attention in my blog of 22 August to the interim findings of the study, on which the CMA invited views.


The main issue for local authorities is that leaseholders are more likely to be dissatisfied with the performance of their property manager if the freeholder is a local authority or housing association than if they are a private owner. The reasons for this are not clear.


The study notes that arrangements for consultation, transparency, internal complaints mechanisms and systems to spread or defer the costs of service charges for major works and generally more extensive and often operate better than in the private sector. Nor did the CMA find any evidence of "systematic failures of process or regulation". But they do conclude that performance varies and that some local authorities may be providing a poor service or poor value for money.


The CMA's interim report invited views on whether freeholders, including councils, should be required to competitively tender property management services.


Their final report has come out against this proposal, although it does recommend legislation to enable a majority of leaseholders in a block to trigger retendering of the property management contract or to veto the appointment of a particular contractor. However, it is recognized that local authority freeholds would probably need to be excluded from this right.


There are two recommendations in the report specifically directed at local authorities. The first is that there should be better mechanisms for sharing best practice among local authorities, to help all councils match the performance of the best. The second calls for more transparent reporting of service costs, with leaseholder costs identified by block, rather than for an estate as a whole.

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