When changing your block managing agent, the perception is that it will be a long and involved process; The reality is quite different with the incoming managing agent usually co-ordinating all aspects of the handover. Common misperceptions are as follows:

1. We will have to arrange handover of documents, finances etc
Any experienced managing agent worth their salt will be able to co-ordinate this. Most agents have a checklist of documents and information they expect to see. In the digital age, most handovers are done electronically and usually quite quickly.
Initial documents are usually shared ahead of the management commencement (copies of leases, details of contractors, leaseholder contact details.

It is normal for the incumbent agent to transfer enough funds to cover working capital on day one of management and then a full financial handover occurs within 30 days. It’s normal to have this “overlap” period as this allows contractor invoices received after the commencement of management by the new agent to be settled. It also allows the incumbent agent to complete financial reconciliations as not all managing agents reconcile daily like Common Ground

2. The incumbent agent will keep any surplus service charge funds
Under section 42 of the 1987 Landlord & Tenants Act, service charge contribution must be held in separate account. Section 156 of the Commonhold and leasehold reform act expanded on the requirements which are set out as follows:

42A
– Service charges must be held in a designated account
– Leaseholders have the right to assess compliance
– Leaseholders can withhold payments if they believe a non-compliance has occurred

42B
– Failure to comply with section 42A can result in a fine as an offence will have been committed

3. The incumbent agent won’t co-operate
Levels of co-operation vary greatly as no managing agent likes to lose a client, however, if an agent fails to co-operate, directors of the RMC/RTM can raise a complaint firstly with the agent and then with whichever Ombudsman service the agent is signed up to.

Since 1st October 2014, The Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 compelled all managing agents to be part of an Ombudsman scheme.
There are occasions where the managing agent and/or freeholder cease to exist (bankruptcy/administration) and whilst this is rare, Common Ground has experience of taking over estates faced with this dilemma.

The process of replacing your managing agent
The first stage is to review the contract with the incumbent agent to check the termination clauses and to establish if any penalty clauses exist. Most agents work on 90 days termination and don’t apply penalties for moving agents assuming the original management agreement ran for more than 12 months.

The second stage is to select your new agent and ensure you have agreed all terms BEFORE you terminate the agreement with the existing agent. Do read the management agreement carefully. Agents vary greatly to the extent they tie you in and be sure to ensure that ALL commissions are declared and, importantly, what mechanisms exist to ensure the agent does comply.

The process of interviewing/selecting a new managing agent is the most onerous part of the process but it’s worth investing time and effort into. Working with a managing agent you trust gives such piece of mind.