A new lease of life: - CentreForum

A New Lease of Lifescheme would ensure that these standards are met by all managingagents, and would raise standards by introducing qualifications andan ombudsman service.The huge sums of money held and spent by managers in Englandand Wales - which could be between £1.275 billion and £2.5 billion 64- mean that an appropriate level of accounting competency isessential. But leasehold managers are subject to less regulation thanother similar professionals such as letting agents or estate agents,despite the fact that these have less responsibility but considerablymore accounting regulation. 65 For example, all estate agents mustsign up to an ombudsman service and the Office for Fair Trading(OFT) has a duty to ensure that they comply with the Estate AgentsAct. It also has the ability to ban agents from operating if they failto do so.Beyond estate agent regulation, the previous government sought toestablish a licensing scheme for letting agents with the Associationof Residential Letting Agents (ARLA) but the plans were blockedby the current government. 66 The state also funds the NationalApproved Letting Scheme (NALS), an accreditation service forprivate rented lettings and management agents. In this context,the leasehold management sector appears peculiarly overlooked interms of consumer support.The nature of leasehold management means that many years’worth of savings in reserve accounts can be removed withoutleaseholders realising, whereas the monthly nature of letting agents’work means that unscrupulous agents will be quickly detected.So it is surprising that leasehold management is less regulatedthan almost all other professions in which money is held and thefailure of sections 152 and 156 of the 2002 Act – which dealt withservice charge accounts and holding money in separate accounts64 The London Assembly estimates that in London alone more than £500 millionis spent a year on service charges, based on an average of £850 per lease inthe public sector and £1,800 to £2,000 for the private sector. ARMA writtensubmission to ‘Highly charged: Residential leasehold service charges in London’,March 2012.65 A letting agent simply holds rent, pays bills, and then passes the remainderof the money to the property owner. A leaseholder managing agent mustcommission work and spend large amounts of money on behalf of leaseholders.Letting agents have a statutory scheme of deposit protection for renters, andestate agents have to abide by standards in the Estate Agents Act. Moreover, theshorter nature of letting contracts mean that it is easier for letting customers tofind a new agent if they are unsatisfied.66 See BBC News, ‘Letting agents set for regulation’, 5 May 2009, and BBC News,Letting agents ‘let off the hook’ by government, 12 June 2010.38