Reputation: Using unregulated firms is risking yours!
Before Montague, let’s call it ‘BM’ in the timeline of property management, one of the key reasons institutions gave for not investing in residential property was ‘reputational management’. Or rather, the lack of it. Managing an office block was easy and any disputes would be of a corporate, rather prosaic nature. No kittens were hurt and no families thrown callously to the street by vicious, grasping landlords. But the residential sector! Wow! That’s a whole different, and highly vocal, ball game.
For that very reason, it’s absolutely fundamental to ensure that when the relationship with the tenant breaks down, the landlord has been both ethical and correct in their approach to recovering outstanding sums due to them. If they haven’t, even if monies are rightfully owed, trial by social media could well fatally, and permanently, damage their reputation. There’s none that shout so loud as the aggrieved. Whether they have a case or not!
Block management is one of those sectors that has a fairly clear procedure to collection of outstanding service charges or ground rents and yet many managing agents are still risking both theirs and their client’s reputation, not to say their bank balance, by not understanding that it’s often only ‘legal’ costs that can be recovered in the collection of outstanding debts. This means that only a ‘legal representative’, generally a solicitor, can reclaim those costs at Court or the FTT.
Many leases nowadays contain clauses that allow freeholders and/or their agents to collect fees in respect of recovery of debts. The clauses, more often than not, refer specifically to ‘legal costs and disbursements’. The implications are worrying and clear: if fees have been charged to the tenant by an unregulated firm acting for the landlord or their agents in recovering arrears, then there is a very real danger of both reputational and monetary damage.
At SLC we know that using unregulated firms has created a virtual ‘time bomb’. Whilst not quite on the scale of the PPI financial scandal, the clock is ticking. When it stops, the Courts and the FTT are going to be a very
It’s crucial to take legal advice on arrears recovery systems and procedures. If you have any concerns, however small, as a landlord or agent, that you may be contravening the law, contact SLC and we will advise you.busy places, as the blast radius will hit everyone. Only those who have rigorously employed the correct procedures and ‘legal representatives’ will sleep easy. The rest, I’m afraid, will find themselves “être dans la merde jusqu’au cou”. Both reputationally and literally.