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OFT finds problems in Scottish property management

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 while 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 recommends:

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 was 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."

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