Scottish property managers

12 February 2009

The OFT has published its report on property managers in Scotland. The report finds that competition in this market is not working well for consumers. The level of switching is very low. Consumers often do not understand their rights and obligations, and do not have a clear understanding of the standards they can expect from a property manager. When things go wrong, there is no effective redress mechanism.

Download Property managers in Scotland - a market study (pdf 411 kb).

The report recommends a number of significant changes to the property managers market in Scotland.

Key recommendations:

• The early implementation of a self-regulatory scheme with an independent complaints redress mechanism promoted by the Scottish Government, if this fails to be effective, there is a case for statutory regulation.
• The Scottish Government to develop an advice service for proprietors and managing agents.
• Details of management fees and obligations be available when buying a property, and that this should become a requirement under the Homebuilders Code.

And in specific relation to land maintenance services that:

• Consumer Focus Scotland should help bring forward a test of the legislation that enables owners to switch their land maintenance company.

See press release.

Annexes - all pdf files.

• Annexe A - List of consultees and contributors (68 kb)
• Annexe B - Survey of consumer experiences of property management - a report of findings (446 kb)
• Annexe C - Survey of property managers (435 kb)
• Annexe D - Market definition (71 kb)
• Annexe E - Choice and competition (159 kb)
• Annexe F - The regulatory and legislative background (133 kb)
• Annexe G - International comparisons (132 kb)
• Annexe H - Evidence from the Scottish Household Condition Survey (142 kb)
• Annexe I - Local authority use of planning agreements (94 kb)
• Annexe J - Local authority use of planning conditions (87 kb)
• Annexe K - Glossary (100 kb)

20 January 2009

The OFT will be publishing its report containing it main findings and recommendations in February 2009. This is later than the previously estimated publication date of January 2009. The OFT has taken the decision to delay the publication of the report to February so that it can explore further some of the key recommendations it intends to put forward with the relevant stakeholders in advance of its publication.

5 January 2009

The OFT has published a report which was commissioned as part of its market study into Scottish Property Managers.

Download Survey of consumer experiences of property management – a report of findings (pdf 502 kb)

The report, by Ipsos MORI, is a survey of flat owners in Scotland and outlines their experiences and satisfaction levels of the different types of property management services available.

The report has been published in the interests of transparency and forms part of the OFT's evidence base. The full and final report is due to be published at the end of January 2009, and will take into account the findings of this survey and a variety of other research undertaken by OFT into this market.
 
Any views expressed within this report are those of the Ipsos MORI and do not necessarily reflect the views of the OFT, nor should any conclusions be drawn from any of the information contained within the report as to any recommendation the OFT may make.

6 November 2008

As part of its market study, the OFT commissioned Ipsos MORI to undertake a survey of flat-owners to look in detail at how well the property managers market in Scotland was working from the perspective of consumers. In addition, the OFT has also sought information from property managers across Scotland, asking them to complete an online survey.

The information gained from these pieces of work will both inform our findings and any prospective recommendations that the OFT may put forward. We intend to make a copy of the report on the consumer survey available on this webpage when it has been completed. Details of all the surveys conducted as part of the study will be published in the final report.

The team is close to finishing the information gathering stage of the study, although we are still gathering some further information at the moment and intend to hold further meetings shortly. The OFT is now reviewing the information that it has gathered and is considering what recommendations, if any, would be appropriate in the light of its findings.

Following the launch of the study the OFT decided to include within the scope of its study the supply of communal land maintenance services to property owners in Scotland. The main focus of the study remains property maintenance and repair services.

The OFT originally indicated that we would publish our findings and any recommendations by the end of the year. Unfortunately we have had to push back the publication date for the study report to January 2009, chiefly because the information gathering phase of the project has taken us longer than originally expected.

We are grateful to those consumer and property managers who have participated in these surveys. We are also grateful to all of the individuals who have contributed to the study by sending us their views and comments about their experiences.

17 June 2008

The OFT is carrying out a market study into Scottish property managers. In Scotland, home owners in tenements and other collective residential properties often use property management agents, sometimes known as factors, to manage common and shared property - for example roofs, staircases, entrances and gardens.

The purpose of the study is to determine whether the market for residential property management services is working effectively. In particular the study will assess the current level of competition in this sector and to investigate whether the existing mechanisms through which owners of flats in a block or homes employ property managers to look after common and shared property (or communal land) give rise to significant consumer detriment.

Why the OFT is conducting a market study?

The Scottish Consumer Council (SCC) has submitted evidence to the OFT about its concerns about property managers. Based on that evidence and our own enquiries and discussions with other bodies including the Scottish Government we have decided to undertake a market study to assess the effectiveness of the market in which property managers operate.

An OFT market study, using powers under section 5 of the Enterprise Act 2002 (EA02), facilitates a market-wide consideration of both competition and consumer issues.

The SCC has raised concerns about the level of consumer detriment that may arise from the lack of transparency in contractual terms, the limited extent to which homeowners appear to be driving competition (demonstrated through lack of switching between property managers) and the perception that competition between the property managers themselves is limited.

The main scope of the study

The study will focus on the supply of communal property management services to owners of units in multi-owned dwellings and/or dwellings with communally owned space including self-factoring (that is, the owner-occupiers organise the property maintenance themselves). Where local authorities and housing associations provide property management services to independent flat owners we would count that as within the remit.

Property management services provided to individual owners, for example for the purpose of letting a property, are outside of the remit of the study as are property management services for commercial property.

The issues that we will be looking at includes:

• whether competition between property managers is effective in providing good value for money - in terms of administration fees, standards of service, repairs being carried out to suitable standards and in a timely manner, etc
• residents' awareness of their rights of redress and the contractual obligations of property managers, and 
• how easy it is for residents to switch property managers.

Possible outcomes of the study include:

• giving the market a clean bill of health
• publishing information to help consumers
• encouraging firms to take voluntary action
• encouraging an industry code of practice
• making recommendations to Scottish Government or sector regulators
• investigation and enforcement action against companies suspected of breaching consumer or competition law, or
• a market investigation reference to the Competition Commission.

See FAQs for more information on the study. 

Next steps and timing

The first stage of the study will involve a round of information gathering. We will seek information from various sources, including the owners of residential property and suppliers of property management services to this sector.

The next stage of the study will then be to review our findings and thinking. We intend to publish a report setting out our findings and recommendations by the end of the year.

The OFT will be during the course of the study contacting and consulting with a range of stakeholders across the industry. In addition, the OFT welcomes relevant written submissions on this topic. See the press release announcing the market study.

Consumers wishing to complain about residential property management services should in the first instance contact either Consumer Direct or their local Citizens Advice Bureaux for advice on how to deal with their concerns.

The OFT would though be interested in hearing direct from residential owners about their experiences with Scottish property managers and, in particular, the effectiveness of the Property managers complaints redress systems if they have had cause to pursue a complaint.

Submissions should be sent to:

Scottish property managers market study
Floor 2C
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London EC4Y 8JX

They can also be emailed to propertymanagers.study@oft.gsi.gov.uk

The team leader for the study is Darren Eade.
The project director is Pete Lukacs.
The senior responsible officer is Heather Clayton.

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