Managing Agent Audits – A 360° View
By Richard Lewis – Consultant
Audit. A word that is often met with trepidation and suspicion by Managing Agents. A Managing Agent Audit carried out by an independent expert is an opportunity for Developers, Leaseholders, Tenants, and Managing Agents to undertake a review of how the delivery of their service charge is performing. These reviews provide an opportunity to fully explore all aspects of the management operations being delivered and make sure expectations and standards are aligned.
The cost of living is affecting everyone. Service charges are not immune from this pressure and the increases in utilities, insurances and supply chains are impacting all aspects of the costs of running a building and an estate. The impact these cost rises have on void costs, rental yields and which are passed on to leaseholders and tenants means that pressure is being put on the government and the justice system to act. This pressure in turn is being passed on to developers, investors, and their Managing Agents.
As a result, the need to demonstrate transparency about how funds are being managed has never been so important. The scrutiny that Managing Agents are under means that there is an increased requirement to ensure that documentation, accounts, tenders, and invoicing are accurate, issued correctly, reasonable, and fair.
According to the HM Courts and Tribunal Service, decisions on Residential Property Tribunal cases in England increased from 1,733 in 2021 to 2,282 in 20221. This trend shows an obvious need for Managing Agents to ensure that the information they are issuing, and billing is correct, clear, and concise for bill payers to understand.
It is not just residential charges that are under scrutiny. In addition to the transparency on the finance, it should be a requirement of all Managing Agents to be delivering the standards expected of the product to their occupiers. This should be quantified in the delivery of customer service, management of repairs and maintenance as well as the quality of their record keeping and compliance.
Management Audits are a means to review the management and financial operations of a service charge to ensure that the required criteria required is being delivered.
In addition, these Audits are a good way for the Managing Agent to show off. We have found that the best results from an Audit come when a Managing Agents embraces the review. It as an opportunity to identify how they can make the best of the resource available. Managing Agents can showcase what they are doing well so it can be replicated in other areas of the delivery of their service.
When using an independent and unbiased external consultant to complete the audit, it enables all parties to engage in the process freely. This generally results in the flow of a more open dialogue. This clarity releases the information required to ensure the development is being run not just in line with legal and contractual requirements but benchmarked against industry standards and expectations.
Charles Seifert, Partner at SAY Property Consulting comments:
“As the demand for our time as expert witnesses increases, we have seen a very real shift in the requirement from developers to work with their Managing Agents to ensure their operations are compliant and delivering standards. Our Audits are not designed to be threatening or controversial, they are available to provide independent and impartial guidance and understanding in what is being delivered. As the law and regulations governing property management changes, so does the onus on all parties to make sure they are protected.”
With such scrutiny on the spending of funds, service delivery and standards, developers are increasingly feeling the pressure from their residents and investors. Developers therefore must ensure that their Managing Agents are not just performing to industry standards and legislation, they are enhancing the value of the asset and improving the quality of living.
SAY Property Consulting are available now to discuss how a Management Audit will help you. Please contact Richard Lewis to find out more. Telephone 07552219491 or email richard@sayproperty.co.uk
1Source – https://www.gov.uk/residential-property-tribunal-decisions
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