Scottish property managers

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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