12/09    12 February 2009

The OFT has today published a study into the Scottish property management market which has found that the market is not working well for consumers in Scotland.

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

Scottish property managers, also known as 'factors', manage common shared property such as roofs, staircases and gardens within tenements and other residential properties with a shared common space. Around 135,000 Scottish households rely on property management companies. The OFT's study also looked at land maintenance companies which maintain open spaces, typically on new housing developments.

The OFT found that whilst the majority of people were happy with their property manager, around one in three said they were not. Two-thirds of consumers who had made a complaint about their management firm were dissatisfied with the way their complaint was handled.

The study says that:

• many people do not understand their complex legal rights and are unsure about the standard of service they should expect, and
• there is limited scope for redress when things go wrong, and
• owners rarely switch their property manager – and at the same time, there is little evidence of active competition between property management companies to attract business.

As a result of its findings, the OFT has today recommended:

• early implementation of a Scottish Government promoted self-regulatory scheme, with an independent complaints redress mechanism, to ensure better accountability of property managers for their standards. If this fails, a statutory scheme should be introduced, and
• the development of an advice and mediation service by the Scottish Government - available to owners and managing agents - to help overcome the legal complexities and prevent the breakdown of arrangements.

In addition, the OFT study found similar problems in the market for land maintenance companies, with consumers experiencing particularly extreme barriers to switching land maintenance suppliers when ownership of open spaces had been transferred to private companies.

Following discussion with the OFT, Consumer Focus Scotland has agreed in principle to support home owners to bring forward a test case applying legislation which may allow owners to switch land maintenance company. If this proves to be an impractical option for home owners, then the OFT recommends that the Scottish Government should review the legislation.

The OFT's recommendations have now been submitted to the Scottish Government which has agreed to respond within 90 days.

John Fingleton, OFT Chief Executive, said:

'This is a market that is not working well for many homeowners in Scotland. People often have little or no understanding about their rights, households rarely switch factors, suppliers do not seem to be actively competing with each other and the options for consumers when things go wrong are very limited. The OFT's recommendations for change should be to the benefit of many Scottish consumers.'

NOTES

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

2. In October 2007, Consumer Focus Scotland (formerly the Scottish Consumer Council) submitted evidence to the OFT which raised concerns about Scottish property managers. For more details see the Scottish property managers page on this website.

3. As part of its market study, the OFT commissioned Ipsos MORI to carry out a survey of flat owners to see how well the property managers market in Scotland was working from the perspective of consumers. In addition, the OFT sought information from property managers across Scotland, asking them to complete an online survey. Download the survey (pdf 502 kb).

4. 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.