The Housing Minister, Matthew Pennycook, has said that the Government is looking into implementing the recommendations from Lord Best’s 2019 report on the regulation of property agents (ROPA) and is “committed to ensuring that consumers are protected from abuse and poor service at the hands of unscrupulous property agents”, following news that property management firm First Port has been suspended from The Property Institute following a raft of leaseholder complaints.
The proposals include the introduction of minimum entry requirements and continuing professional development for property agents, the establishment of an independent property-agent regulator, and a mandatory and legally enforceable Code of Practice for property agents.
Speaking in the House of Commons in early March, Pennycook outlined his vision for an increased role for managing agents under commonhold: “Managing agents play a key role in the maintenance of multi-occupancy buildings and freehold estates, and their importance will only increase as we transition toward a commonhold future, and so we are looking again at Lord Best’s 2019 report on regulating the property agent sector, particularly in light of the recommendations in the final Grenfell Inquiry report.
“As part of our response to that report I can confirm that we will strengthen regulation of managing agents to drive up the standard of their service. As a minimum, this should include mandatory professional qualifications which set a new basic standard that managing agents will be required to meet. We will consult on this matter next year.”
A date for the consultation is yet to be announced, but steps to ensure the competence, accountability and professionalism of property management professionals ought to be welcomed, particularly as the government takes further action to put leaseholders back at the centre of decision making and redress the balance of power in their favour.
Long-term capital management requires expertise, and the role of a managing agent requires knowledge of landlord and tenant law, building construction, health and safety regulations, accounting and so much more. There are obvious benefits to professional management and while some leaseholders, especially in blocks where the managing agent has not been performing ‘up to scratch’, may welcome the opportunity to take over management of their building, the fact remains that for most, assuming responsibility for the day-to-day tasks involved with managing a residential block of flats will be unattractive, not to mention potentially beyond their expertise.
The Leasehold and Freehold Reform Act 2024 (LFRA) seeks to address concerns around this by introducing much trailed measures to improve the standardisation of service charge reporting and also to restrict the ability of managing agents and freeholders to earn commission from pacing buildings insurance. Whilst these measures will be welcomed by leaseholders, they will not be entirely free from cost and any increased burden on managers will potentially result in higher management charges. At the moment, a number of these proposals will apply equally to smaller self-managed blocks as well as to larger sites. There are therefore some questions to be addressed in relation to the implementation of these changes.
The government launched a consultation on removing insurance commissions which ended on 24th February 2025, and we currently await further news in relation to the outcome of this.
In my own view, the regulation of managing agents is long overdue and I would wholeheartedly support the proposal to regulate the sector and to build on the good work done by The Property Institute (TPI) (formerly ARMA), who have led the way in setting up a voluntary regulatory scheme for their members. The additional compliance burden of joining this scheme and meeting the relevant standards is not currently compulsory in the field of property management, but those that have chosen to embrace this now will be well placed to deal with the changes that are set to come in the future.
One of the uncomfortable truths in leasehold is that bad management is at the core of many leaseholder concerns and poor practices are in part what has led to the wave of pressure for reform in this sector. In reality, whatever system is in place, be it commonhold or leasehold, when a third party has control over the budget and expenditure on behalf of others there need to be checks and balances to ensure proper accountability. Transparency is therefore key, as is a full and proper understanding of how the underlying costs are generated, which in today’s sophisticated multi-use sites is not as straightforward as it might first appear.
The government has promised a host of consultations over the spring and summer, so I and others will await with interest the further details of the proposed consultation on the regulation of property managers.
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The above is accurate as at 12 May 2025.
The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
